logo
Receive the latest mybusiness news
SUBSCRIBE TO OUR NEWSLETTER
Copyright © 2020 MOMENTUMMEDIA

Government delivers tax cuts to crawl Australia out of historic deficit

Maja Garaca Djurdjevic
Maja Garaca Djurdjevic
06 October 2020 1 minute readShare
tax cuts

BUDGET 2020: Following weeks of speculation, Frydenberg has announced tax cuts as part of Tuesday’s budget that has been deemed as the most important since World War II, with the expectation that it will crawl Australia out of the coronavirus-induced crisis.

The government has rejigged its $158 billion income tax plan, bringing forward tax cuts due to kick in mid-2022 and backdating them to July.

The announced changes are hoped to be implemented by the end of this month and will see those earning between $45,000 and $90,000 pocket an additional $1,080 this financial year.

Advertisement
Advertisement

Employees earning more than $90,000 will take home some $2,565 extra, while people earning over $120,000 are set for the maximum benefit.

Essentially, if backed by Labor, the top threshold of the 19 per cent tax bracket will increase from $37,000 to $45,000, while the top threshold for the 32.5 per cent tax bracket will be lifted from $90,000 to $120,000.

 

According to the government, this acceleration will pump $12.5 billion into the economy in this financial year alone. This will provide around 11.6 million individuals with a tax cut in 2020-21, compared with 2017-18 settings, the budget document reads. 

Late last month, speaking during MyBusiness Week, the CEO of the Institute of Public Accountants (IPA), Andrew Conway, explained that personal income tax reform is key in safeguarding the financial wellbeing of individual entrepreneurs.

“I think that will be critical to actually ensure that small-business owners have confidence to actually survive, first and foremost, that there is a viable business to salvage and then to potentially grow,” Mr Conway said.

“I think we can’t get too ahead of ourselves. We need to still focus on that salvage and survival mode of small business and then using that as a solid foundation to grow.”

SPONSORED CONTENT

 

He noted that while he agrees with the small business minister, Michaelia Cash, that the government can’t tax their way out of this crisis, he believes that the government has an obligation to ensure that the regulatory and the tax settings are reasonable and, wherever possible, relaxed to allow oxygen into the economy.

The leader of the Greens, Adam Bandt, does not share Mr Conway’s sentiment, tweeting on Tuesday that “if there’s money to fund tax cuts for millionaires, then there’s money to lift JobSeeker and keep people out of poverty”.
 
In a series of tweets, Mr Bandt made his disapproval of the government’s tax plan known: “In the middle of a recession, gov shouldn’t give more handouts to the super-wealthy. Tax cuts mean nothing if you don’t have a job. The priority shd be the million unemployed, not the millionaires. The Greens are calling on ALP & Senators to block the gov’s tax cuts.”
Government delivers tax cuts to crawl Australia out of historic deficit
mybusiness logo
Maja Garaca Djurdjevic
Maja Garaca Djurdjevic

Maja Garaca Djurdjevic is the editor of My Business. 

Maja has a decade-long career in journalism across finance, business and politics. Now a well-versed reporter in the SME and accounting arena, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies and enabling citizens to influence decision-making.

You can email Maja on [email protected] 

Leave a Comment

Latest poll

How satisfied are you with the SME measures in the federal budget?