The highlight of the 2020 budget for individual taxpayers is a number of personal tax benefits that are set to be backdated from 1 July 2020 or brought forward by a couple of years.
Lower personal income tax
- Immediate tax relief with personal income tax cuts being brought forward two years and changes to take effect from 1 July 2020. The 19% bracket will increase from $37,000 to $45,000 and the 32.5% tax bracket will increase from $90,000 to $120,000.
- These cuts mean those earning between $37,000 and $45,000 a year will receive an extra $41 a week, and those earning between $50,000 and $90,000 a year receive an extra $49 a week.
- The Low and Middle Income Tax Offset is here to say to stay for another 12 months and the Low Income Tax Offset has been increased from $450 to $700.
Here’s a comparison of the changes to personal income tax are with previous years:
|Current rates in 2020-21||Current thresholds in 2020-21||New thresholds in 2020-21|
|Nil||Up to $18,200||Up to $18,200|
|45%||Above $180,000||Above $180,000|
|Plus Medicare Levy of 2%|
|Low income tax||Up to $445||Up to $700|
|Low and middle income tax offset||Up to $1,080||Up to $1,080|
To calculate your tax cut go to this handy little tool.
Your Future, Your Super package commencing 1 July 2021
The package announced seeks to increase transparency around super fund performance, increase management and expenditure accountability while making it easier for employees to take their funds with them when they move employers.
- Increased trustee obligations will ensure that decisions are made in the best financial interest of members and provide more information on management and expenditure.
- Super funds will be required to meet performance obligations set out by the Government in an effort to protect members from underperforming funds.
- Greater choice will be placed in the hands of employees with superannuation options by providing an online comparison tool.
- Portability of super funds will be made easier by linking the employee with their super fund to avoid additional accounts being created on a change of employment.
Extension to the First Home Loan Deposit Scheme
An additional 10,000 places will be provided in 2020/21 to support the purchase of a new or a newly built home. This will allow first home buyers to enter the market with only a 5% deposit with the Government set to guarantee 15% of the loan.
Benefits for older Australians
The government will provide two additional support payments of $250 to pensioners and other eligible social security recipients. The payments are expected to be made from November 2020 and again in early 2021. The payments are exempt from taxation.
Granny flat CGT exemption – The government will provide a capital gains tax exemption for granny flat arrangements so long as there is a formal agreement in place. The measure is designed to protect older Australians and those with a disability by ensuring there is an enforceable agreement in place and reduce impediments to Granny flat arrangements by providing a CGT exemption.
Home care package – A further 23,000 home care packages will be available to address important aged care services. The home care packages are at all levels of care, designed to support those who have needs from basic care to a high level of care.