The cuts will take effect over
a number of years, culminating in 2024-2025 with substantial cuts for
upper-income Australians. The initial cuts, however, will come into force in
Taxpayers earning up to AUD
37,000 per year, who are in the 19% rate bracket, will see reduced taxes of about
AUD 200. Those earning between AUD 37,000 and 87,000 (the 32.5% tax bracket)
will have reductions of about AUD 530. And taxpayers above that figure, who pay
tax at 37%, will get a tax cut on all of their income up to AUD 125,000.
The legislation also addresses
inflation in the brackets, and will move the brackets upward over a period of
years, saving taxpayers additional amounts.
As in the United States, there
was substantial opposition to the cuts on the basis that they favor the
well-to-do, and will cost the government some AUD 144 billion over the next
several years. However, the government prevailed on the basis that the cuts
will boost business and pay for themselves over time. For its part, the Labor
party said it will substantially increase the cuts for those lower in the
income scale should it win the next elections, scheduled for no later than
November of 2019.
The government is also seeking
a corporate rate cut from 30% to 25%, but has not yet accumulated sufficient
support. Some members of Parliament are insisting that the government get
tougher on corporate tax avoidance if it wants to cut corporate taxes. Votes on
that proposal could occur very shortly.
Related: Australia Enacts New Withholding Rules for Residential Property
These cuts will lessen the tax
burden on employees in Australia.