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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 2018-2019.
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.