The government’s tax cuts have passed through the Senate without amendment. From next week low-and-middle income earners with an income up to $126,000 will receive up to $1080 or $2160 for dual-income couples in annual tax cuts, with the tax relief to apply from the 2018-2019 period.
In a joint statement to the press, the PM Scott Morrison and Treasurer Josh Frydenberg said further benefits for low-income earners had been locked in for the future. The legislation promises more tax relief by increasing the top threshold of the 19 cents in the dollar tax bracket from $41,000 to $45,000 and by further increasing the low income tax offset from $645 to $700 in 2022-23.
“In combination with the legislated removal of the 37 per cent tax bracket in 2024-25, the government is delivering structural reform to the tax system by reducing the 32.5 cents in the dollar tax rate to 30 cents in the dollar,” the statement read.
“Together, these tax relief measures will create a flatter and better tax system that will improve incentives for hard-working Australians and ensure that 94 per cent of Australians will face a marginal tax rate no higher than 30 cents in the dollar in 2024-25. Once our plan is fully implemented, around 13.3 million taxpayers will pay lower taxes.”
Small business advocates have welcomed the move to provide tax cuts for individuals and unincorporated business, suggesting the cuts will bring a boost to business confidence.
Angus Capel, Small Business Advocate, Xero Australia suggested the tax cuts could provide stimulus to the economy
“In addition, small business owners from unincorporated businesses will see up to $1,080 plus the unincorporated tax discount of up to $1,000 in their tax return this year. From past analysis Xero has made about the impact of corporate tax cuts, we know that when small business owners receive extra cash it increases confidence and leads to more hiring, wage rises and increased investment.”
In addition, Capel urged those who benefitted from the cuts to share the love with local businesses.
“Research has shown that the majority of consumers admit they could do more to support the sector, but only 25 per cent of household goods and services are currently purchased from a small business.”
Still, Capel suggests more could be done to assist small business owners in their pursuit of growth and success.
“Xero welcomes the Government’s tax cuts and we will continue to work with them to improve awareness of the other drivers of small business success. But the economy needs more to get the employment and wage growth wheels moving with the RBA pushing the government to think carefully about infrastructure and productivity investment.”
This post originally appeared on Kochie’s Business Builders and is republished here with permission.