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Changes in tax rates 2020: All you need to know

The coronavirus pandemic has impacted every Australian in some way. Job losses and financial stress are common concerns, while Victorians have endured the lengthiest lockdown yet. The good news is that the Federal Government has announced personal tax cuts to help stimulate the economy and get people back on their feet.

Here’s what you need to know about the tax rate changes.

What are the tax changes announced in the Budget 2020–21?

On 6 October 2020, the Federal Government revealed their delayed Budget 2020–21. Much of it focused on recovery support, jobs creation and tax cuts. Most notably, they brought forward personal income tax cuts that were meant to take effect two years from now. Instead, Australians get to enjoy reduced tax rates right now, rather than from the 2022–23 financial year.

While it’s great news all round, it means you need to wrap your head around the changes. This is particularly true if you are a business owner with employees, or a sole trader who does their own taxes.

Individual income tax rate changes

How much you end up saving on tax will depend on a variety of circumstances. Business owners will need to understand these different situations so they can apply the tax changes. Failing to put in place these changes could mean an uncomfortable phone call from the Australian Taxation Office.

To help get your head around these tax changes, here are some of the different lifestyle types of Australians. The first figure is their income, with the second figure how much they will save from tax cuts for the 2020–21 financial year:

Single with no children

  • $40,000: $1,209
  • $60,000: $2,415
  • $80,000: $2,160
  • $100,000: $2,310
  • $125,000: $2,460
  • $150,000: $2,430
  • $200,000: $2,430
  • $250,000: $2,430

 

Double-income couple with young children (salary split 50/50)

  • $40,000: $0
  • $60,000: $1,210
  • $80,000: $2,418
  • $100,000: $4,830
  • $125,000: $4,830
  • $150,000: $4,320
  • $200,000: $4,620
  • $250,000: $4,920

 

Double-income couple with teenage children (salary split 67/33)

  • $40,000: $955
  • $60,000: $1,559
  • $80,000: $3,020
  • $100,000: $3,020
  • $125,000: $3,960
  • $150,000: $4,725
  • $200,000: $4,845
  • $250,000: $4,590

 

Single retiree

  • $40,000: $1,209
  • $60,000: $2,415
  • $80,000: $2,160
  • $100,000: $2,310
  • $125,000: $2,460
  • $150,000: $2,430
  • $200,000: $2,430
  • $250,000: $2,430

Note: These figures are approximates and will depend on a variety of factors. Speak to your accountant or financial advisor for more information.

Where to find the best accountant in Burnie

Whether you’re a business owner or sole trader, these changes will likely impact your tax obligations. You will also need to apply these changes to your current payroll so your employees get the right amount on their paycheques.

We understand these changes can be confusing and even frustrating. If you’re looking for the best accountant in Burnie to help take care of your tax needs, reach out to Gillet & Associates today. We are small business taxation specialists who can help maximise your tax efficiency. From tax returns to BAS, payroll, bookkeeping and much more, we’ll take the hard work off your hands so you can get back to running your business.

For expert tax advice, contact Gillet & Associates today or call us on (03) 6431 8151.

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