Did you vote for the Libs because you thought you would get a $1,080 cash bonus in your tax refund this year? Have you been anticipating what you will buy with the money? Already done your tax and been a bit disappointed?
I have been asked about this so many times since the new tax cuts passed into Legislation that it warrants a clear explanation.
When Kevin Rudd decided to give us all $900 back in the GFC aftermath, it was a cash payment. We could spend it on anything we chose to. This one is not. It’s a tax offset that is non-refundable and only reduces your tax payable by the amount you are entitled to – and not everyone is entitled to the full amount.
If you earn under $37,000, you receive a Low Income Tax Offset (a reduction in tax payable) of $445 and a Low and Middle Income Tax Offset of $225.
So you will pay $225 less tax than if you earned the same amount last year. The low Income Tax Offset has been there for many years.
Those that earn between $37,000 and $48,000 will receive a reduced Low Income Tax Offset and a Low and Middle Income Tax Offset of $225 plus 7.5% of the excess above $37,000.
If you are earning $48,000 up to $90,000 you get the most benefit – and the full $1,080. If you are making over $90,000, the $1,080 offset reduces by 3% of the amount over $90,000. Once you hit $126,000 – sorry… not a penny.
These offsets do not reduce the 2% Medicare Levy that most of us have to pay; they only reduce tax payable. So if you are a wage earner you will probably get a bigger refund than you would have otherwise, but that lovely idea of $1,080 in your pocket may have to wait.
There is an offset calculator here: https://www.budget.gov.au/2019-20/content/estimator/incometax.htm
Still confused? Make an appointment to get your tax done, and I will provide you with a clear explanation of how the tax cuts relate to your specific situation and ensure you get your full entitlement, whatever that may be.