Australia, insurance, car, home, live, holidays

Treasurer Josh Frydenberg delivering the Budget speech.Credit:Alex Ellinghausen

Mr Frydenberg announced a one-off $420 cost-of-living payment for workers who have already been getting the low- and middle-income tax offset (LMITO),worth up to $1080,since the 2019 pre-election budget.

It means single-income households that receive the maximum $1080 offset will get $1500 when they do their tax return for 2021-22.

The combined measures will cost the federal government $11.9 billion over the forward estimates,including $4.1 billion for the one-off payment.

Mr Frydenberg said it was part of a “temporary,targeted and responsible” package of measures to ease cost-of-living pressures.

The LMITO was originally introduced as a tax cut of up to $540 in 2018-19 for Australians earning less than $126,000 a year. It was raised to its current level of up to $1080 from 2019-20.

But the offset is not being extended for 2023-24,meaning the 10 million Australians currently receiving it will have up to $1500 less in their tax refund in the second half of next year.

The cost of this year’s LMITO and the one-off payment will be covered by the rivers of revenue flowing into government coffers.

In last year’s budget,the government predicted it would bring in $445.6 billion in tax receipts for 2021-22,but it now expects them to reach $512.5 billion – almost $67 billion more in gross terms.

Treasury said the tax boost had come from a faster than expected economic recovery from the coronavirus pandemic,with an improved outlook for employment and average wages,and stronger than expected business profits.

Treasury collected $24.6 billion in super fund taxes,$9.3 billion more in 2021-22 than predicted in last year’s budget. The government also expects to collect $109.1 billion in gross company tax revenue – nearly $27 billion more than forecast last year.

Not all tax revenue rose,however. The government will collect $12.95 billion in tobacco excise this financial year,almost $2 billion less than the $14.75 billion it was expected to raise. That excise is predicted to continue to fall,to $12.8 billion in 2022-23 and $12.7 billion the year after.

Jacqueline Maley cuts through the noise of the federal election campaign with news,views and expert analysis.Sign up to our Australia Votes 2022 newsletter here.

License this article