Stage 3 tax cuts will come into effect in the new financial year. The planned cuts were recently revised and will now benefit low-income earners.
The Australian Government recently amended the Stage 3 Tax Cuts legislation (which had been previously passed by Parliament in 2019). These tax cuts will commence on 1 July, 2024.
These amendments will result in taxpayers who earn below $150,000 per year receiving a bigger tax cut, with lower and middle-income earners to benefit the most. Those earning above $200,000 per year will have their tax cut reduced from $9,075 per year to $4,529 per year.
The tax rate for those in the first bracket ($18,201-$45,000) will reduce from 19% to 16%, and the rate for those in the next bracket ($45,001- $135,000) will reduce from 32.5% to 30%. The top bracket will now commence at $190,001, increased from $180,001.
Below is a table showing the changes to the original legislation.
The size of your tax cut (excluding Medicare Levy)
| Taxable Income | Tax cut under original stage 3 | Tax cut under revised stage 3 | Difference |
| $20,000 | $0 | $0 | $0 |
| $30,000 | $0 | $354 | $354 |
| $40,000 | $0 | $654 | $654 |
| $50,000 | $125 | $929 | $804 |
| $60,000 | $375 | $1,179 | $804 |
| $70,000 | $625 | $1,429 | $804 |
| $80,000 | $875 | $1,679 | $804 |
| $90,000 | $1,125 | $1,929 | $804 |
| $100,000 | $1,375 | $2,179 | $804 |
| $120,000 | $1,875 | $2,679 | $804 |
| $140,000 | $3,275 | $3,729 | $454 |
| $160,000 | $4,675 | $3,729 | -$946 |
| $180,000 | $6,075 | $3,729 | -$2,346 |
| $200,000+ | $9,075 | $4,529 | -$4,546 |
The Government has explained that the changes were required to assist people with cost-of-living challenges, as all taxpayers will now receive a tax cut, instead of just those on higher incomes.
From a planning point of view, it may be beneficial for taxpayers to bring forward tax deductible expenditure to the 2024 tax year.
Published 3 April, 2024