Personal income tax cuts pass

21 June 2018

Personal income tax cuts worth billions of dollars have been passed in the Senate today.

BDO National Leader for Business Services, Matt Laming said:

“The introduction of personal tax cuts for the majority of the taxpayer population delivered in the form of an abolition of the 37% tax rate bracket and increase in the top marginal rate threshold from 1 July 2024 means we could see some meaningful changes to the disposable income of households.

“The changes mean that taxpayers would enjoy a tax rate of 32.5% on income from $41,000 to $200,000 – but only if the amendments remain unscathed through two more electoral cycles. The opposition has suggested that, if given the opportunity, it will repeal the later years’ measures and replace them with other relief targeted at lower income earners.

“If they remain in place, this will allow the Coalition to brag that approximately 94% of all taxpayers will face a marginal tax rate of 32.5% or less in the 2025 income year.

“The closing gap between personal tax rates on income up to $200,000 and the corporate tax rate, together with the changes to the Division 7A provisions could see a real change in the focus of tax planning for families running small to medium businesses and high net worth individuals. This would be a welcome change as it will reduce the incentive for aggressive tax planning in that taxpayer segment.”