Josh Frydenberg delivered the election year Federal Budget 2022-23 on 29 March 2022. Whilst no new general tax cuts were announced, he did announce significant one-off tax offsets or payments to low and middle income earners, pensioners, and welfare recipients with a stated aim of addressing “cost of living pressures”.
Perhaps the highlight of the Budget announcements on a personal tax front was the Government’s announcement that it will extend the Low and Middle Tax Offset (LMITO) for a further year and enhance it for all those eligible with a one-off $420 “cost of living tax offset”.
The LMITO is available to resident individuals with annual income not exceeding $126,000. For the 2022/23 income year, eligible LMITO recipients will receive up to $1,500 for a single household or up to $3,000 for dual income household. The government says that around ten million low and middle income earners will receive the benefit of the one-off $420 cost of living tax offset through this measure at a projected tax receipt cost to the country of $4.1 billion.
Various eligible pensioners, welfare recipients, veterans and concession card holders will also receive a one-off tax exempt payment of $250. It will be automatically paid in April 2022, at a cost to the country of $1.5 billion.
The general individual personal tax rates for 2022/23 will remain unchanged from 2021/22 and for residents will be as follows:
However, the better news for other individual Australian taxpayers is that previously legislated Stage 3 tax changes are still set to commence from 1 July 2024. From 1 July 2024, the 32.5% marginal tax rate will be cut to 30% for one large tax bracket between $45,000 and $200,000. The 37% tax bracket will then be entirely abolished.
Higher income earners will benefit most from these future slated tax cuts. For instance, from 1 July 2024, an individual earning $100,000 will pay $1,375 less tax. An individual earning $200,000 will pay $9,075 less tax.
There were also a few other tax-related measures announced in the Budget that may make some positive difference to the budgeting or saving plans of Australian households. These include:
Check out the full coverage from the Federal Budget 2022-23, which will continue to develop throughout the week as new insights and video content are published.