What the new tax cuts will mean for you

Minister for Finance Matthias Cormann addresses media. Picture: AAP Image/Sam Mooy
Minister for Finance Matthias Cormann addresses media. Picture: AAP Image/Sam Mooy

AUSTRALIAN workers could receive an extra $1000 when they lodge their tax returns from next week, after the federal government secured crossbench support for its flagship package.

A three-stage plan will flatten the tax rate to 30 per cent for people earning between $45,000 and $200,000 from mid-2024.

The first stage of the tax plan will deliver up to $1080 to low and middle-income earners when they lodge their tax returns for 2018/19.

The second stage delivers a 19 per cent tax rate from 2022/23 to people earning up to $45,000.

“Today is about income tax relief for millions of hardworking Australians. The issues that have been raised with us, we will deal with in good time,” Finance Minister Mathias Cormann told reporters.

Labor Leader Anthony Albanese. Picture: AAP

Labor wanted the crossbench to bring the second stage forward and leave the third stage for later.

Labor Leader Anthony Albanese says the opposition will continue pressing its case for the amendments in the Senate.

“The crossbenchers are doing themselves a disservice if they don’t support the separating out of stage three of the tax cuts,” he told reporters.

WHAT WILL YOU GET FROM THE TAX PACKAGE?

STAGE ONE:
* A tax offset for people earning low and middle incomes will be doubled for the 2018/19 and 2019/20 financial years.
* The change means singles will get up to $1080, while dual-income families could score up to $2160 each year.

STAGE TWO:
* From 2022/23, the government will lift the upper threshold for the 19 per cent tax bracket from $41,000 to $45,000.
* At the same time, the low income offset will be increased from $645 to $700.

STAGE THREE:
* From July 1, 2024, the 32.5 per cent tax rate will drop to 30 per cent.
* That means all Australians earning between $45,000 and $200,000 will be on the 30 per cent rate.

THE LONG-TERM BENEFIT:
* Over a decade, the government says its plan means someone with an average taxable income of about $60,000 would be more than $15,000 better off.