As I said in my first newsletter of the year, released last week, when commenting on Stage three tax cuts – “a week is a long time in politics”. And so, it was. Within three days of sending our newsletter changes were announced.
To understand the differences between what was proposed and what has actually occurred for different income levels – please see below.
Graph 1
Annual Income
Proposed Stage 3
Actual Stage 3
$20,000
$0
$54
$40,000
$0
$654
$50,000
$125
$929
$60,000
$375
$1,179
$70,000
$625
$1,429
$80,000
$875
$1,679
$90,000
$1,125
$1,929
$100,000
$1,375
$2,179
$120,000
$1,875
$2,679
$140,000
$3,275
$3,729
$150,000
$3,975
$3,729
$160,000
$4,675
$3,729
$180,000
$6,075
$3,729
$200,000
$9,075
$4,529
Source : SMSF Alliance comparison dated 25 January 2024.
People earning up to $146,486 will receive a larger benefit, while those above that income level will have their benefits scaled back. Above $200,000 your benefit will be halved from $9,075 to $4,529. In raw terms of sheer numbers, roughly 11 million taxpayers are better off and $1.8 million taxpayers are worse off by the changes, so politically, it probably works.
Unfortunately, the simplification of our progressive tax scales by removing the 37 percent tax bracket, has now been abandoned. This means we revert to the status quo with five tax scales and continue with the associated complexity. Somehow, I don’t think there is the political courage or appetite to confront comprehensive tax reform in Australia. Australia remains up there with the Scandinavian nations as one of the highest personal tax jurisdictions in the world.
