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.
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.”
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.