Understanding Australia's Upcoming Cost of Living Tax Cuts
As July 2024 approaches, Australians are eagerly anticipating significant tax cuts. These cuts are designed to offer relief from the escalating cost of living. Here’s a simplified breakdown of what’s on the horizon:
The 19% tax rate will be reduced to 16% for incomes between $18,201 and $45,000.
The 32.5% tax rate will be lowered to 30% for incomes between $45,001 and $135,000.
The threshold for the 37% tax rate will increase from $120,000 to $135,000.
The threshold for the top 45% tax rate will see a rise from $180,000 to $190,000.
These adjustments are designed to alleviate the tax burden across all income brackets, with a focus on middle-income earners. For example, an individual earning an average wage of around $73,000 can expect a tax cut of $1,504.
These changes are expected to return bracket creep, lower average tax rates for all taxpayers, and provide greater protection against inflationary pressures.
For more detailed information on the tax cuts and to calculate your estimated tax savings, visit the official government website here.
Superannuation Guarantee Contribution (SGC) Changes
The SGC is the minimum amount of superannuation that employers must pay to their eligible employees. The SGC rate is currently 11% of an employee's ordinary time earnings, but it is scheduled to increase to 11.5% from 1 July 2024, and then to 12% from 1 July 2025. This means that employers will be required to contribute more to their employees' superannuation accounts, and employees will have more savings for their retirement.
As we navigate this transition, it's crucial for businesses to update their payroll systems and for employees to understand how this could affect their salaries and retirement savings.
Staying informed and prepared will ensure that everyone can make the most of these changes for a more secure financial future.
Contact your Hood Sweeney Adviser here.