On Tuesday 6 October, the government handed down its Budget for the 2020–21 year.
Here are some of the key Budget announcements that may affect you. Note that each of these proposals will only become law if it is passed by Parliament.
Taxation
Personal tax cuts
The Government has announced that it will bring forward stage two of the previously legislated tax cuts that were due to take effect from 1 July 2022 by two years. As a result, from 1 July 2020:
- The Low Income Tax Offset (LITO) will increase from $445 to $700. The full offset will be available to those with taxable incomes below $37,500 and will reduce at a rate of 5 cents per dollar up to taxable income of $45,000. The LITO will then be reduced at a rate of 1.5 cents per dollar between taxable incomes of $45,000 and $66,667.
- The top threshold for the 19% personal income tax bracket will increase from $37,000 to $45,000.
- The top threshold for the 32.5% personal income tax bracket will increase from $90,000 to $120,000.
What this could mean for you
The following chart shows the tax cuts you might receive this financial year based on your income levels and the amount of tax you’re currently paying:
For more information about the proposed changes to tax thresholds and offsets, speak to your accountant.
Social Security
Additional support payments for welfare recipients
Government support recipients will receive two separate economic support payments of $250, to be paid progressively from December 2020 and March 2021.
What this could mean for you
You may be eligible for the two payments of $250 if you’re currently receiving:
- Age Pension (including Age Pension (Blind))
- Carer Allowance*
- Carer Payment
- Commonwealth Seniors Health Card
- Disability Support Pension (including Disability Support Pension (Blind))
- Double Orphan Pension*
- DVA Gold Card
- DVA Payments
- DVA Seniors Card
- Family Tax Benefit (fortnightly recipients)*
- Family Tax Benefit (lump sum recipients)*
*You might not be eligible if you’re receiving a primary income support payment.
Supporting you through changes
Depending on your circumstances, the Budget proposals could have an impact on your financial situation and your financial plans for the future.
If you have any concerns, or would like to discuss your financial strategy, please do not hesitate to contact your Pinnacle Adviser to discuss further.