Changes to personal income tax

The Personal Income Tax Plan has gone through recent changes regarding rates, thresholds and offset entitlements. These changes were announced in the 2018-2019 Federal Budget and were implemented at the start of the 2019 financial year. For the upcoming tax season, individuals should review these changes in case they are affected.

The 32.5% tax bracket was increased from $87,000 to $90,000 for the years 2018 to 2022. The following two years will see a further increase to $120,000 and in 2024 it will increase again to $200,000. These changes will apply to residents, foreign-residents and working holiday makers. Pay As You Go (PAYG) withholding rates and schedules will also be updated to include these changes.

Australian residents whose income does not exceed $125,333 could now be entitled to an addition to the low and middle income tax offset. This can be available after an assessment of a person’s individual income tax return. This addition applies to the 2018 to 2022 financial years. The amount you receive will be based on the following income levels:

  • If below $37,000 you are entitled to $200
  • Between $37,000 and $48,000 you are entitled to $200 plus 3% of the amount of the income that exceeds $37,000
  • Between $48,000 and $90,000 you are entitled to $530
  • Between $90,000 and $125,333 you are entitled to $530 plus 1.5% of the amount of the income that exceeds $90,000.

In 2022 and future financial years, the low income tax offset will be amended to include individuals who receive less than $66,667, pending assessment of individual tax return. This offset will be $645, reduced by 6.5% of the amount by which your income exceeds $37,000 but does not exceed $41,000 and a further 1.5% of the amount by which your relevant income exceeds $41,000.

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