Australians will need to wait until July 2021 to see some of the benefit of the Government’s Budget tax cuts, the Australian Tax Office (ATO) has confirmed.
The Government on Tuesday announced it would bring forward tax cuts originally scheduled for July 2022 with the tax cuts to be implemented immediately and backdated to 1 July 2020.
And while taxpayers will see the benefit flow through to their pay packets as soon as the ATO can see bipartisan support for the cuts, it will take longer for Australians to receive the benefit of the backdated payments. This will instead come at the end of the financial year next year.
“The adjustments to the withholding schedules are designed to ensure that taxpayers have the correct amount of tax withheld from their pay going forward,” the ATO said in a statement on Thursday.
“It is not possible for the ATO to determine the extent of ‘over-withholding’ that may have occurred for each and every taxpayer as this is highly dependent on individual circumstances and will be different for everyone.
“Any ‘over-withholding’ that occurred prior to the employer updating their payroll software and processes will be included in the tax assessment of the employee at the end of the income year.”
Around 11.6 million Australians will see some form of tax cut at a cost of $17 billion under the Budget move as Treasurer Josh Frydenberg attempts to kick start the economy.
Who gets what in 2020 Budget tax cuts?
Here’s how it will break down for you:
If you earn up to $40,000, you’ll save up to $1,060
If you earn more than $40,000, up to $80,000, you’ll save up to $$2,160
If you earn more than $80,000, up to $100,000, you’ll save up to $2,445
If you earn more than $100,000, up to $120,000, you’ll save up to $2,745
If you earn more than $120,000, up to $200,000, you’ll save up to $2,565
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