About 70 per cent of tax payers will get up to $1080 back in their tax return after the government's tax cut bill passed.Credit:Jessica Shapiro
That relief comes in the form of the The Low and Middle Income Tax Offset or"Lamington"(a cheque worth up to $1080 a year in your tax return) which will apply to people earning up to $126,000 a year - 70 per cent of taxpayers - over the next three years,when they lodge their tax return.
The government's tax bill then implements two further stages of tax reform,one beginning in 2022-23 and the third and final in 2024-25. Labor had said the government should bring forward the second stage to help further stimulate growth,and not legislate the $95 billion third stage. In agreeing to pass the full tax package,the party said it would review the final stage before the next election.
However,the Coalition wants to reward those who have worked hard and had a pay rise by giving them larger tax cuts,which it argues will result in a bigger economic pie for everyone.
Who will be affected by the tax cuts?
The budget papers show there are 10.1 million taxpayers across the spectrum of earning levels who stand to gain from the tax cuts.
Some will gain more than others,particularly after 2024,when the Coalition's modelling shows that someone earning $200,000 a year will get a tax cut worth $11,640 compared with $1205 for someone earning $50,000 a year. Why? Because high-income earners pay more tax.