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  • Personal Income Tax Plan

    The Government's Personal Income Tax Plan, as announced in the 2018-19 Federal budget, has been passedExternal Link by Parliament.

    There will be:

    • changes to income tax rate thresholds in the 2018-19, 2022-23 and 2024-25 income years
    • a new low and middle income tax offset to reduce the tax payable by low and middle income earners in the 2018-19, 2019-20, 2020-21 and 2021-22 income years
    • a new low income tax offset from the 2022-23 income year (to replace both the new low and middle income tax offset and the current Low Income Tax Offset ).

    The following table outlines the updated rates and thresholds along with the updated offset entitlements linked to these changes.

    Updated rates, thresholds and offset entitlements linked to these changes

    Rate (%)

    New tax thresholds

    From 1 July 2018
    Income range ($)

    New tax thresholds

    From 1 July 2022
    Income range ($)

    New tax thresholds

    From 1 July 2024
    Income range ($)

    Tax free

    0 - 18,200

    0 - 18,200

    0 - 18,200

    19

    18,201 - 37,000

    18,201 - 41,000

    18,201 - 41,000

    32.5

    37,001 - 90,000

    41,001 - 120,000

    41,001 - 200,000

    37

    90,001 - 180,000

    120,001 - 180,000

    -

    45

    >180,000

    >180,000

    >200,000

    New low and middle income tax offset

    Up to 530

    -

    -

    Current Low Income Tax Offset

    Up to 445

    -

    -

    New low income tax offset

    Up to 645

    Up to 645

    Increase income tax rate thresholds

    A number of income tax thresholds will change across the 2018-19, 2022-23 and 2024-25 income years. These changes apply to residents, foreign-residents and Working Holiday Makers. Pay as you go withholding rates and schedules will be updated to include these changes.

    2018-19, 2019-20, 2020-21 and 2021-22 income years

    • Increase the top threshold of the 32.5% tax bracket from $87,000 to $90,000

    2022-23 and 2023-24 income years

    • Increase the top threshold of the 19% tax bracket from $37,000 to $41,000.
    • Increase the top threshold of the 32.5% bracket from $90,000 to $120,000.

    2024-25 income year onwards

    • Increase the top threshold of the 32.5% tax bracket from $120,000 to $200,000.

    New low and middle income tax offset

    2018-19, 2019-20, 2020-21 and 2021-22 income years

    Australian resident individuals (and certain trustees) whose income does not exceed $125,333 are entitled to the new low and middle income tax offset. Entitlement to the new offset is in addition to the existing Low Income Tax Offset and is available on assessment after you lodge your income tax return.

    If your income:

    • does not exceed $37,000 you are entitled to $200
    • exceeds $37,000 but does not exceed $48,000 you are entitled to $200 plus 3% of the amount of the income that exceeds $37,000
    • exceeds $48,000 but not $90,000, you are entitled to $530
    • exceeds $90,000 you are entitled to $530 less 1.5% of the amount of the income that exceeds $90,000.

    New low income tax offset

    2022-23 and later income years

    A new low income tax offset replaces both the current Low Income Tax Offset and the low and middle income tax offset.

    Consistent with the current Low Income Tax Offset, individuals with taxable income that does not exceed $66,667 (as well as certain trustees taxed on behalf of individuals) will be entitled to the new low income tax offset.

    The amount of the new low income tax offset is $645 reduced by:

    • 6.5% of the amount by which your income exceeds $37,000 but does not exceed $41,000 and
    • a further 1.5% of the amount by which your relevant income exceeds $41,000.

    Legislation and supporting material

    Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018External Link

    More information

    For employers, the Pay as you go (PAYG) withholding tax tables have also been updated.

    For more information, refer to Budget 2018-19 Part 2 page 33External Link

      Last modified: 22 Jun 2018QC 56085