Lower taxes for hard-working Australians and small business

 

The Government is building a tax system that rewards effort and underpins a strong economy

The Australian Government is lowering taxes for working Australians and backing small and medium‑sized business, while ensuring all taxpayers, including big business and multinationals, pay their fair share.

Lower taxes form part of our plan that is delivering a stronger economy and record job creation. The Government’s strong fiscal management means that it can deliver surpluses while also rewarding hard‑working Australians and supporting small businesses. Lower taxes will support consumption growth and strengthen our economy.

In this Budget the Government is further delivering on its promise to build a simpler and more competitive tax system.

Hard-working Australians should pay lower taxes. The Government supports a progressive tax system that eases cost of living pressures, provides reward for effort and sustains economic growth. These long‑term changes to the tax system will ensure that Australians keep more of the money they have worked hard to earn.

The Government will continue to back small business. Small and medium-sized businesses are the engine room of the economy and employ more than 7 million workers. We will continue to lighten their load so they can do what they do best.

The Government also believes everyone should pay their fair share of tax, particularly multinationals and big businesses.

Building a better tax system

1 Lower taxes for hard-working Australians

  • Immediate tax relief for low- and middle‑income earners of up to $1,080 for singles or up to $2,160 for dual income families to ease the cost of living.
  • Lowering the 32.5 per cent rate to 30 per cent in 2024-25, increasing the reward for effort by ensuring a projected 94 per cent of taxpayers will face a marginal tax rate of no more than 30 per cent.
  • A further $158 billion of tax relief, building on our already legislated Personal Income Tax Plan.

2 Backing small business

  • Increasing the instant asset write-off threshold to $30,000 and expanding access to medium‑sized businesses with an annual turnover of less than $50 million to help them reinvest in their business, employ more workers and grow. Around 3.4 million businesses will be eligible to benefit.
  • Fast-tracking the company tax rate cut to 25 per cent for small and medium‑sized companies with an annual turnover of less than $50 million and increases to the unincorporated small business tax discount rate.

3 Making multinationals and big business pay their fair share

  • $12.9 billion in tax liabilities raised from tax compliance activities since July 2016.
  • New funding for the ATO to target tax avoidance by multinationals, big business and high‑wealth individuals.

Delivering lower taxes to hard‑working Australians

Building on the Government’s Personal Income Tax Plan

Our tax system must be fair for all Australians, one that provides reward for effort.

The Government is delivering a better tax system through its legislated Personal Income Tax Plan. The plan delivers lower taxes for low- and middle‑income earners. It puts more money back into the pockets of hard-working Australians.

Disciplined fiscal management has allowed the Government to enhance the plan, providing further tax relief to most Australian taxpayers.

From 2018-19, the Government will further reduce taxes for low- and middle‑income earners to ease cost of living pressures and support consumption growth. Low- and middle-income earners will have their tax reduced by up to $1,080 for single earners or up to $2,160 for dual income families, after lodging their tax returns as early as 1 July 2019.

The new targeted offset will benefit over 10 million low- and middle‑income earners
Bar chart with people inside that shows 2.3 million taxpayers with taxable income up to $37,000, will receive tax relief up to $255. 1.7 million taxpayers with taxable incomes between $37,001 and $47,999 will receive tax relief between $255 and $1,080. 4.5 million taxpayers with taxable incomes between $48,000 and $90,000 will receive tax relief of $1,080. 1.6 million taxpayers with taxable incomes between $90,001 to $126,000 will receive tax relief between $1,080 and $0.

In 2022-23, the Government will preserve the tax relief provided by the larger low and middle income tax offset by increasing the top threshold of the 19 per cent tax bracket from $41,000 to $45,000 and increasing the low income tax offset from $645 to $700.

In 2024-25, the Government will reduce the 32.5 per cent tax rate to 30 per cent, more closely aligning the middle tax bracket with corporate tax rates, improving incentives for working Australians and increasing the reward for effort.

In total, around 13.3 million taxpayers will pay permanently lower taxes in 2024-25 as a result of the Government’s enhanced plan. This is in addition to steps the Government has already taken to simplify the tax system by reducing the number of tax rates to three. In 2024-25, 94 per cent of taxpayers are projected to face a marginal rate of 30 per cent or less.

The Government’s enhanced plan maintains a progressive income tax system that also rewards effort and contributes to a strong economy.

As a result of the Government’s enhanced plan, around 94 per cent of Australian taxpayers are projected to face a marginal tax rate of 30 per cent or less in 2024-25.

The Government’s Personal Income Tax Plan means more Australians will face lower rates of tax

A graph that shows in 2017-18, there were four tax rates; a tax rate of 19% applied for taxable incomes above the tax free threshold up to $37,000. 22% of taxpayers faced this as their top marginal tax rate. A tax rate of 32.5% applied for taxable incomes between $37,001 and $87,000. 52% of taxpayers faced this as their top marginal tax rate, including an average full-time earner. A tax rate of 37% applied for taxable incomes between $87,001 and $180,000. 21% of taxpayers faced this as their top marginal tax rate. A tax rate of 45% applied for taxable incomes above $180,000. 5% of taxpayers faced this as their top marginal tax rate. A graph that shows that in 2024-25, without the Government's plan, there would still be four tax rates, which would still apply over the same taxable income ranges. A projected 16% of taxpayers would face 19% as their top marginal tax rate. A projected 47% of taxpayers would face 32.5% as their top marginal tax rate. A projected 29% of taxpayers would face 37% as their top marginal tax rate, including an average full-time earner, who is therefore projected to face a higher top marginal tax rate in 2024-25 without the Government's plan than in 2017-18. A projected 8% of taxpayers would face 45% as their top marginal tax rate. A graph that shows that in 2024-25, with the Government's plan, there would be three tax rates. A tax rate of 19% would apply for taxable incomes above the tax free threshold up to $45,000. 24% of taxpayers would face this as their top marginal tax rate. A tax rate of 30% would apply for taxable incomes between $45,001 and $200,000. 70% of taxpayers would face this as their top marginal tax rate, including an average full-time earner, who is therefore projected to face a lower top marginal tax rate in 2024-25 with the Government's plan than in 2017-18. A tax rate of 45% would apply for taxable incomes over $200,000. 6% of taxpayers would face this as their top marginal tax rate. In 2024-25, with the Government's plan, the projected share of tax paid by these three cohorts is as follows; the projected 24% of taxpayers who would face  19% as their top marginal tax rate are projected to pay 2% of all personal tax paid, the projected 70% of taxpayers who would face 30% as their top marginal tax rate are projected to pay 62% of all personal tax paid, the projected 6% of taxpayers who would face 45% as their top marginal tax rate are projected to pay 36% of all personal tax paid. A footnote at the bottom of the chart notes that average full-time earnings includes both males and females, and excludes earnings from overtime work.

Immediate tax relief for hard‑working Australians

Easing the cost of living

Immediate relief to low- and middle‑income earners

The Government will increase the low and middle income tax offset, providing tax relief of up to $1,080 for singles or up to $2,160 for dual income families. The offset will be available for the 2018-19, 2019-20, 2020-21 and 2021-22 income years.

Individuals with taxable incomes up to $37,000 will have their tax reduced by up to $255. This will increase incrementally for those earning between $37,000 and $48,000. The maximum offset of $1,080 will be available to taxpayers with taxable incomes between $48,000 and $90,000. The offset then gradually reduces to zero at a taxable income of $126,000. The offset will be received as a lump sum on assessment after individuals lodge their tax returns.

This will assist more than 10 million Australians, with around 4.5 million individuals receiving the full offset for the 2018-19 income year.

The maximum offset of $1,080 is more than double the offset of $530 announced in the 2018-19 Budget. The base amount has also increased from $200 to $255 for those earning up to $37,000.

This additional tax relief will reward hard-working Australians, support consumption growth and ease cost of living pressures for low- and middle‑income earners by putting more of their money back in their pockets to spend, save or invest.

From 2022-23: Locking in the benefits of lower taxes

From 1 July 2022, the Government will preserve the tax relief from the larger low and middle income tax offset by increasing the top threshold of the 19 per cent tax bracket from $41,000 to $45,000 and increasing the low income tax offset from $645 to $700.

This builds on the changes in last year’s Budget, which increased the $37,000 threshold to $41,000 and the low income tax offset from $445 to $645 from 1 July 2022. It also builds on the increase to the top threshold of the 32.5 per cent tax bracket from $90,000 to $120,000 from 1 July 2022, which the Government has already made into law.

Reward for effort

Ensuring a projected 94 per cent of Australian taxpayers will face a marginal tax rate of 30 per cent or less in 2024‑25

From 2024-25: Further structural changes to the tax system to deliver lower taxes

In 2024-25, the Government will reduce the 32.5 per cent marginal tax rate to 30 per cent. This will more closely align the middle tax rate of the personal income tax system with corporate tax rates and improve incentives for working Australians.

The rate reduction builds on the changes the Government has already made into law, increasing the top threshold of the middle tax bracket from $120,000 to $200,000 and abolishing the 37 per cent tax bracket.

The result will be a simpler system comprising three tax rates: 19 per cent, 30 per cent and 45 per cent.

From 1 July 2024, Australians earning between $45,000 and $200,000 will face a marginal tax rate of 30 per cent. As a result of the Government’s reforms, individuals can earn more knowing that their extra income will not be taxed at a higher marginal rate.

Under the plan, in 2024-25, around 94 per cent of Australian taxpayers are projected to face a marginal tax rate of 30 per cent or less. This is compared with a projected 16 per cent who would have faced a marginal tax rate of 30 per cent or less if the plan was not in place, and 63 per cent who would have faced a marginal tax rate of 32.5 per cent or less.

The Government’s enhanced plan will increase the rewards for effort and ensure that hard-working Australians will keep more of what they earn if they get a promotion or choose to work additional hours.

Rates in 2017-18 Thresholds in 2017-18 New Rates in 2024-25 New Thresholds in 2024-25
Nil Up to $18,200 Nil Up to $18,200
19 per cent $18,201 - $37,000 19 per cent $18,201 - $45,000
32.5 per cent $37,001 - $87,000 30 per cent $45,001 - $200,000
37 per cent $87,001 - $180,000 - -
45 per cent Above $180,000 45 per cent Above $200,000
Low income tax offset in 2017-18 Up to $445 Low income tax offset in 2024-25 Up to $700

A progressive tax system

Delivering a system that remains progressive and internationally competitive

Maintaining a progressive tax system

Australia has a progressive tax system which ensures that those with the greatest ability to pay contribute a larger share of personal income tax revenue, while also providing reward for effort and incentives to get ahead.

The Government will maintain a progressive tax system. It is projected that in 2024-25 around 60 per cent of all personal income tax will be paid by the highest earning 20 per cent of taxpayers, broadly similar to that cohort’s share if 2017-18 rates and thresholds were left unchanged. The share of personal income tax paid also remains similar for the top 1, 5 and 10 per cent of taxpayers.

Under our enhanced plan, an individual with taxable income of $200,000 earns 4.4 times more income than an individual with taxable income of $45,000, but in 2024‑25 will pay around 10 times more tax.

The enhanced plan will result in a better tax system, with greater reward for effort while ensuring top earners pay their share.

Share of personal income tax paid by the top 1%, top 5%, top 10% and top 20% of taxpayers
  Share of tax paid in 2017-18 Share of tax paid in 2024-25 without the Government's plan Share of tax paid in 2024-25 with the Government's plan
Top 1% of taxpayers 16.7% 15.6% 17.0%
Top 5% of taxpayers 32.7% 31.6% 32.9%
Top 10% of taxpayers 44.6% 43.4% 44.0%
Top 20% of taxpayers 60.6% 59.5% 59.5%

Remaining internationally competitive

Australia currently has relatively high rates of tax, cutting in at relatively low levels of income compared with other countries.

Australia’s top marginal tax rate cuts in at around 2.2  times average full-time earnings, compared with 4  times in Canada and the UK, and 8 times in the US. Without the changes announced in last year’s Budget, Australia’s ratio was projected to drop to around 1.7, reducing our international competitiveness and ability to attract and retain talent. Increasing the bottom threshold of the top tax bracket from $180,000 to $200,000 as legislated means that this ratio is now expected to fall more modestly to around 1.9.

Current top marginal tax rates comparison, selected OECD countries

alt text

Source: Treasury calculations, 2017 OECD Revenue Statistics and Tax Database.

Tax relief for hard‑working Australians

Australian taxpayers will pay less tax, with immediate relief for low- and middle‑income earners

2018-19: Tax relief under the 2018-19 and 2019-20 Budgets
Taxable income
($)
2017-18 tax liability*
($)
Annual reduction in tax paid under the changes in the 2018-19 Budget
($)
Additional annual reduction in tax paid under the changes in the 2019-20 Budget
($)
Total annual reduction in tax paid (compared with 2017-18)
($)
20,000 0 0 0 0
21,000 87 87 0 87
22,000 279 200 55 255
23,000 569 200 55 255
24,000 859 200 55 255
25,000 1,149 200 55 255
30,000 2,397 200 55 255
40,000 4,947 290 190 480
50,000 8,547 530 550 1,080
60,000 12,147 530 550 1,080
70,000 15,697 530 550 1,080
80,000 19,147 530 550 1,080
90,000 22,732 665 550 1,215
100,000 26,632 515 400 915
120,000 34,432 215 100 315
140,000 42,232 135 0 135
160,000 50,032 135 0 135
180,000 57,832 135 0 135
200,000 67,232 135 0 135

* The table provides stylised cameos based on the tax payable for an individual, excluding any transfer payments. The tax liability and reduction in tax is calculated only taking into account the basic tax scales, low income tax offset, low and middle income tax offset and the Medicare levy (with 2017-18 low-income thresholds). Actual outcomes for many individuals and households would differ.

Photo depicting the example 1 family

Noah works as an electrician for a construction company and Sophia is a laboratory technician. They have one child. In the 2018-19 income year, Noah earns $66,000 and Sophia earns $54,000.

With the personal income tax relief provided in last year’s Budget and this Budget (together the ‘enhanced plan’), Noah and Sophia each pay $1,080 less tax and together Noah and Sophia are $2,160 better off for 2018-19 than under 2017‑18 rates and thresholds. They receive their combined tax relief of $2,160 after they lodge their 2018‑19 tax returns, which they may lodge as early as 1 July 2019. They will continue to benefit from tax relief in future years.

  • Under 2017-18 rates and thresholds, Noah would pay tax of $14,307 and Sophia $9,987 for 2018‑19.
  • Under the changes in last year’s Budget, Noah and Sophia would each pay $530 less tax for the 2018‑19 income year. The changes announced in this Budget build on this and increase the tax relief they each receive by $550 to a total of $1,080.
Photo depicting the example 2 couple

Guy is a newly graduated community pharmacist and Alex is an engineer. In the 2018-19 income year, Guy earns $60,000 and Alex earns $90,000.

Under the enhanced plan, Guy pays $1,080 less tax and Alex $1,215 less tax compared with 2017-18 rates and thresholds. Together, Guy and Alex pay $2,295 less tax for 2018‑19. They receive most of their combined tax relief of $2,295 after they lodge their 2018‑19 tax returns, which they may lodge as early as 1 July 2019.

  • Under 2017-18 rates and thresholds, Guy would pay tax of $12,147 and Alex $22,732 for 2018‑19.
  • Under the changes in last year’s Budget, Guy would pay $530 less tax, and Alex $665 less tax for the 2018‑19 income year. The changes announced in this Budget build on this to provide additional tax relief to Guy and Alex of $550 each. This brings total tax relief under the enhanced plan for Guy and Alex to $1,080 and $1,215 respectively.
Photo depicting the example 2 person

Tom is a high school teacher and earns $67,000 in the 2018-19 income year. Tom is single.

Under the enhanced plan, Tom pays $1,080 less tax for 2018-19 and will continue to benefit in future years.

  • Under 2017-18 rates and thresholds, Tom would pay tax of $14,662 for 2018‑19.
  • Under the changes in last year’s Budget, Tom would pay $530 less tax for the 2018‑19 income year. The changes announced in this Budget build on this to increase the amount of tax relief by $550 to a total of $1,080.
Photo depicting the example 4 person

Sam is 20 and is an apprentice chef. In 2018-19, she earns $28,000.

Under the enhanced plan, Sam pays $255 less tax for 2018‑19 compared with 2017‑18 rates and thresholds.

  • Under 2017-18 rates and thresholds, Sam would pay tax of $1,977 for 2018‑19.
  • Under the changes in last year’s Budget, Sam would pay $200 less tax compared with 2017‑18 rates and thresholds. The changes in this Budget build on this to increase the amount of tax relief by $55, providing total tax relief of $255 for 2018‑19.

Building a better tax system

Delivering lower taxes

2022-23: Tax relief under the 2018-19 and 2019-20 Budgets
Taxable income
($)
2017-18 tax liability*
($)
Annual reduction in tax paid under the changes in the 2018-19 Budget
($)
Additional annual reduction in tax paid under the changes in the 2019-20 Budget
($)
Total annual reduction in tax paid (compared with 2017-18)
($)
20,000 0 0 0 0
21,000 87 87 0 87
22,000 279 200 55 255
23,000 569 200 55 255
24,000 859 200 55 255
25,000 1,149 200 55 255
30,000 2,397 200 55 255
40,000 4,947 455 125 580
50,000 8,547 540 540 1,080
60,000 12,147 540 540 1,080
70,000 15,697 540 540 1,080
80,000 19,147 540 540 1,080
90,000 22,732 675 540 1,215
100,000 26,632 1,125 540 1,665
120,000 34,432 2,025 540 2,565
140,000 42,232 2,025 540 2,565
160,000 50,032 2,025 540 2,565
180,000 57,832 2,025 540 2,565
200,000 67,232 2,025 540 2,565

* The table provides stylised cameos based on the tax payable for an individual, excluding any transfer payments. The tax liability and reduction in tax is calculated only taking into account the basic tax scales, low income tax offset, low and middle income tax offset and the Medicare levy (with 2017-18 low-income thresholds). Actual outcomes for many individuals and households would differ.

Photo depicting the example 5 couple

Jenny is a dentist, and Victor is a librarian. In the 2018‑19 income year, Jenny earns $120,000 and Victor earns $61,000.

Under the enhanced plan, Jenny pays $315 less tax compared with 2017-18 rates and thresholds, paying $34,117 in tax for 2018-19. Victor receives tax relief of $1,080, paying $11,427 in tax. Together, Jenny and Victor are $1,395 better off for 2018-19 compared with 2017-18 rates and thresholds. They receive most of their combined tax relief of $1,395 after they lodge their 2018‑19 tax returns, which they may lodge as early as 1 July 2019.

In 2022-23, Jenny earns $130,000 and Victor $65,000. Under the enhanced plan, Jenny pays $2,565 less tax compared to 2017-18 rates and thresholds, with a tax liability of $35,767 and Victor pays $1,080 less tax, with a tax liability of $12,867 for 2022‑23. Together, Jenny and Victor are $3,645 better off for 2022-23, compared with 2017‑18 rates and thresholds.

Photo depicting the example 2 person

Philippa is an accountant and earns $90,000 in the 2018-19 income year. She is a single mother caring for two children.

Under the enhanced plan, for 2018-19 Philippa pays $1,215 less tax compared with 2017-18 rates and thresholds, paying $21,517 in tax.

By 2022-23, Philippa is earning $100,000. For 2022‑23 Philippa pays $1,665 less tax under the enhanced plan compared with 2017-18 rates and thresholds.

Photo depicting the example 7 person

Anthea is a cyber security specialist and earns $130,000 in the 2018-19 income year. Anthea is single.

Under the enhanced plan, Anthea pays $135 less tax for 2018-19 compared with 2017-18 rates and thresholds, paying a total of $38,197 in tax.

In 2022-23, with greater experience, Anthea is earning $170,000. Anthea pays $2,565 less tax for 2022‑23 compared with 2017-18 rates and thresholds, paying a total of $51,367 in tax for 2022-23.

Photo depicting the example 8 family

Lin is an architect, married to Rohan who is at home caring for their young child.

Lin earns $90,000 in the 2018-19 income year. Under the enhanced plan, Lin pays $1,215 less tax for 2018-19 compared with 2017-18 rates and thresholds, paying $21,517 in tax.

In 2022-23, Lin earns $98,000. Lin pays $1,575 less tax for 2022-23 compared with 2017-18 rates and thresholds, paying $24,277 in tax for 2022-23.

Photo depicting the example 9 family

Ed, a labourer, is married to Abigail, a retail assistant. Ed and Abigail have one child. In the 2018-19 income year, Ed earns $44,000 and Abigail earns $40,000.

Under the enhanced plan, Ed pays $780 less tax compared with 2017-18 rates and thresholds, paying a total of $5,607 in tax for 2018-19. Abigail pays $480 less tax, paying $4,467 in tax. Together Ed and Abigail are $1,260 better off for 2018‑19 compared with 2017‑18 rates and thresholds. They receive their combined tax relief of $1,260 after they lodge their 2018-19 tax returns, which they may lodge as early as 1 July 2019.

In 2022-23, Ed is earning $49,000 and Abigail $45,000. Under the enhanced plan, Ed and Abigail each pay $1,080 less tax compared with 2017-18 rates and thresholds, paying tax of $7,107 and $5,667 respectively for 2022-23. Together, Ed and Abigail pay $2,160 less tax for 2022-23.

More tax relief

Maintaining reward for effort

2024-25: Tax relief under the 2018-19 and 2019-20 Budgets
Taxable income
($)
2017-18 tax liability*
($)
Annual reduction in tax paid under the changes in the 2018-19 Budget
($)
Additional annual reduction in tax paid under the changes in the 2019-20 Budget
($)
Total annual reduction in tax paid (compared with 2017-18)
($)
20,000 0 0 0 0
21,000 87 87 0 87
22,000 279 200 55 255
23,000 569 200 55 255
24,000 859 200 55 255
25,000 1,149 200 55 255
30,000 2,397 200 55 255
40,000 4,947 455 125 580
50,000 8,547 540 665 1,205
60,000 12,147 540 915 1,455
70,000 15,697 540 1,165 1,705
80,000 19,147 540 1,415 1,955
90,000 22,732 675 1,665 2,340
100,000 26,632 1,125 1,915 3,040
120,000 34,432 2,025 2,415 4,440
140,000 42,232 2,925 2,915 5,840
160,000 50,032 3,825 3,415 7,240
180,000 57,832 4,725 3,915 8,640
200,000 67,232 7,225 4,415 11,640

* The table provides stylised cameos based on the tax payable for an individual, excluding any transfer payments. The tax liability and reduction in tax is calculated only taking into account the basic tax scales, low income tax offset, low and middle income tax offset and the Medicare levy (with 2017-18 low-income thresholds). Actual outcomes for many individuals and households would differ.

Photo depicting the example 10 family

Clancy is a radiologist at a regional hospital and Bella works part time as an office administrator at the primary school of their two children. In the 2018-19 income year, Clancy earns $110,000 and Bella earns $34,000.

For 2018-19, Clancy pays $615 less tax under the enhanced plan compared with 2017-18 rates and thresholds, paying a total of $29,917 in tax, and Bella pays $255 less tax, paying a total of $2,982 in tax. Together, they pay $870 less tax for 2018‑19. Clancy and Bella receive most of their combined tax relief of $870 after they lodge their 2018-19 tax returns, which they may lodge as early as 1 July 2019.

In 2022-23, with extensive practical experience, Clancy earns $140,000. Bella earns $38,000. For 2022‑23, Clancy pays $2,565 less tax under the enhanced plan than under 2017-18 rates and thresholds, paying $39,667 in tax. Bella pays $380 less tax, paying $3,847 in tax. Together, they pay $2,945 less tax for 2022-23 compared with 2017-18 rates and thresholds.

In 2024-25, Clancy is earning $155,000 and Bella $40,000. Clancy pays $6,890 less tax under the enhanced plan compared with 2017-18 rates and thresholds, paying tax of $41,192 for 2024-25. Bella pays $580 less tax, paying $4,367 in tax. Together, Clancy and Bella are $7,470 better off for 2024-25 compared with 2017-18 rates and thresholds.

Photo depicting the example 11 family

Amira, a lawyer, is married to Ali, a veterinarian. They have children. In each year from 2018-19 to 2024-25 they earn $100,000 and $90,000 respectively.

For 2018-19 together they pay $2,130 less tax under the enhanced plan compared with 2017-18 rates and thresholds, and together pay $47,234 in tax. They receive most of their combined tax relief of $2,130 after they lodge their 2018‑19 tax returns, which they may lodge as early as 1 July 2019.

  • Under the changes in last year’s Budget, Ali and Amira would together pay $1,180 less tax for the 2018-19 income year. The changes announced in this Budget build on this and increase their combined tax relief by $950 to a total of $2,130.

Extending this out to 2024-25, with the 2022-23 and 2024-25 changes of the enhanced plan coming into effect, compared with 2017-18 rates and thresholds, their family receives cumulative tax relief of $19,660 over the period from 2018‑19 to 2024-25.

  • Under the changes in last year’s Budget, Ali and Amira would together receive cumulative tax relief of $10,120 over the seven‑year period. The changes announced in this Budget build on this and increase their family’s cumulative tax relief by $9,540 to a total of $19,660.
Photo depicting the example 12 couple

Margaret is a surgeon and is married to Antony. In each year from 2018‑19 to 2024‑25 Margaret earns $250,000.

For 2018-19, Margaret pays $135 less tax under the enhanced plan compared with 2017-18 rates and thresholds, and pays $90,597 in tax.

Extending this out to 2024-25, with the 2022‑23 and 2024‑25 changes of the enhanced plan coming into effect, compared with 2017-18 rates and thresholds, Margaret receives cumulative tax relief of $17,310 over the period from 2018‑19 to 2024-25.

Photo depicting the example 13 couple

Tim is a part‑time podiatrist and Jessica is a software engineer. In each year from 2018-19 to 2024-25 they earn $50,000 and $130,000 respectively.

For 2018-19 they pay $1,215 less tax under the enhanced plan compared with 2017‑18 rates and thresholds, and together pay $45,664 in tax. They receive most of their combined tax relief of $1,215 after they lodge their 2018‑19 tax returns, which they may lodge as early as 1 July 2019.

Extending this out to 2024-25, with the 2022-23 and 2024-25 changes of the enhanced plan coming into effect, compared with 2017-18 rates and thresholds, they receive cumulative tax relief of $18,495 over the period from 2018‑19 to 2024‑25.

Backing small business

We have lowered the small business tax rate and in this Budget will increase and expand access to the instant asset write-off

Lowering the small business tax rate

The Government has provided lower taxes for around 3.4 million businesses employing around 7.1 million workers.

The Government has legislated lower tax rates for small and medium‑sized companies with turnovers below $50 million. Small and medium‑sized companies currently facing a 27.5 per cent rate will have a 25 per cent rate by 2021-22, which is five years earlier than previously planned. This compares to the standard company tax rate of 30 per cent.

An incorporated food van business with four part‑time employees makes $150,000 per year. As a result of the Government’s tax relief, the small business will have an extra $3,750 this year and $7,500 in 2021-22.

Fast-tracking these tax cuts will benefit around 970,000 small and medium per centsized companies that employ around 5.2 million workers.

The Government has also legislated to bring forward the increases to the unincorporated small business tax discount rate, rising from 8 per cent currently to 13 per cent in 2020-21 and to 16 per cent from 2021 per cent22 (up to the existing cap of $1,000). This will benefit around 2.4 million businesses, employing around 1.9 million workers.

The tax relief also helps medium‑sized employers. A company that operates regional tours with 28 employees and $8 million in turnover that makes an annual profit of $800,000 will retain an extra $20,000 this year and $40,000 in 2021-22 to invest, grow and employ more workers.

Greater incentives to invest and grow

Empowering Australian businesses to grow, invest and support a stronger economy

The Government is helping businesses invest and grow through the instant asset write-off.

In this Budget, the Government is increasing the instant asset write-off threshold to $30,000 until 30 June 2020. The threshold applies on a per asset basis, so eligible businesses can instantly write off multiple assets. This builds on the Government’s earlier announcement that the instant asset write-off threshold would be increased from $20,000 to $25,000 and extended to 30 June 2020. More than 350,000 businesses have already taken advantage of the instant asset write‑off.

The Government is also expanding access to the instant asset write-off to include medium‑sized businesses by increasing the annual turnover threshold from $10 million to $50 million. Around 22,000 additional businesses employing around 1.7 million workers will now be eligible to access the instant asset write-off.

These changes will benefit small and medium‑sized businesses and improve their cash flow as they will be able to immediately deduct purchases of eligible assets each costing less than $30,000.

Around 3.4 million businesses, employing around 7.7 million workers will be eligible.

The increased threshold and expanded eligibility will apply from 7.30pm (AEDT) on 2 April 2019 to 30 June 2020.

The Government’s changes ensure that more businesses continue to benefit from the instant asset write-off as they grow, supporting them to invest in assets, build their business and employ more workers.

alt text
Photo depicting the example 14 business

Haylee and Martin own a company, HM Nurseries Pty Ltd, through which they operate several nurseries in Newcastle. HM Nurseries Pty Ltd has an aggregated turnover of $5.2 million and a taxable income of $150,000 for the 2019-20 income year. They employ 15 workers.

To continue to expand the business, and offer delivery services to clients, HM Nurseries Pty Ltd purchases two new vans halfway through the financial year. The vans cost $29,000 each, exclusive of GST.

Under previously announced arrangements, the vans each cost more than the $25,000 threshold for the instant asset write-off in the 2019-20 income year. This means they would be added to HM Nurseries Pty Ltd’s small business depreciation asset pool and depreciated by 15 per cent. HM Nurseries Pty Ltd would claim a tax deduction of $8,700 for the depreciation of the vans.

Under the new $30,000 instant asset write-off, HM Nurseries Pty Ltd would instead claim an immediate deduction of $58,000 for the purchase of the two vans in the 2019-20 income year, $49,300 more than under previously announced arrangements. This will help the business to invest, grow and employ more workers.

The Government’s changes mean that HM Nurseries Pty Ltd pays less tax, increasing its cash flow by over $13,500.

Photo depicting the example 15 business

Mark owns a company, Lat Val Pty Ltd, through which he operates a food manufacturing business in the Latrobe Valley employing 60 staff. Lat Val Pty Ltd has an aggregated turnover of $25 million and a taxable income of $900,000 for the 2019-20 income year. Ordinarily Lat Val Pty Ltd would be too large to access the instant asset write-off, but the changes in the 2019‑20 Budget mean it can now benefit.

Lat Val Pty Ltd purchases 10 new commercial ovens halfway through the income year, at a cost of $12,000 each, exclusive of GST, to allow Lat Val Pty Ltd to expand its business and improve efficiency.

Under existing tax arrangements, Lat Val Pty Ltd would depreciate the new ovens using an effective life of 15 years. Choosing to use the diminishing value method, Lat Val Pty Ltd would claim a tax deduction of $800 per oven, a total deduction of $8,000 for the 2019-20 income year.

Under the new $30,000 instant asset write-off, Lat Val Pty Ltd would instead claim an immediate deduction of $120,000 for the purchase of the 10 ovens in the 2019‑20 income year, $112,000 more than under existing arrangements. This will help the business to invest, grow and employ more workers.

The Government’s changes mean that Lat Val Pty Ltd pays less tax, increasing its cash flow by $30,800.

Delivering for small business

The Government is reducing the cost of doing business, allowing over 3 million small businesses in Australia to grow and create more jobs

Making it easier, cheaper and quicker for small businesses to resolve tax disputes

  • Created a dedicated Small Business Taxation Division within the Administrative Appeals Tribunal with dedicated case managers, a lower application fee and fast‑tracked decisions.
  • Requiring the ATO to pay reasonable legal costs for the small business in certain circumstances when they challenge ATO decisions.
  • Establishing a small business concierge service within the Australian Small Business and Family Enterprise Ombudsman’s office to provide advice and support.

Improving access to advice

  • Establishing 10 tax clinics across metropolitan and regional Australia, as a 12 month pilot, which provide access to free advice to assist unrepresented small businesses and individuals on tax issues.

Improving access to finance

  • Establishing the $2 billion Australian Business Securitisation Fund, which will enhance small businesses’ access to finance.

Making invoicing easier

  • Establishing an e-Invoicing system for Australia which could save businesses an estimated $28 billion in transaction costs over 10 years and increase opportunities to trade globally.

Cutting red tape

  • Streamlining GST reporting for around 2.7 million small businesses by reducing the number of BAS GST questions.
  • Reducing financial reporting and audit costs for businesses currently subject to reportingobligations by more than $300 million over four years.
  • Simplifying and expanding the current regulatory regime for employee share schemes, reducing the time and cost burden for small businesses.

Improving digital capability

  • Creating a non-government organisation dedicated to improving small businesses’ digital capability.

Maintaining the integrity of the tax system

Making multinationals and big business pay their fair share

The Government is committed to maintaining the integrity and sustainability of Australia’s tax system where everyone pays their fair share of tax. This includes ensuring that multinationals pay the correct amount of tax on their Australian profits.

Tax avoidance creates an uneven playing field for the majority of Australian businesses doing the right thing. The Government is restoring fairness in the tax system.

What we have achieved

The Government has implemented more than a dozen measures to strengthen the integrity of Australia’s international tax framework. These measures include implementing the Multinational Anti-Avoidance Law, the Diverted Profits Tax, the G20/OECD Base Erosion and Profit Shifting (BEPS) recommendations, increased tax penalties for large entities, and establishing a Tax Avoidance Taskforce within the ATO.

As a result, since 1 July 2016, the ATO has raised $12.9 billion in tax liabilities against large public groups and multinationals, as well as wealthy individuals and associated groups.

Through the Government’s actions, Australia has some of the toughest laws in the world to combat corporate tax avoidance.

What more are we doing?

The Government is estimated to raise $400 million over four years by closing down tax loopholes that were only available to foreigners investing into Australia through stapled structures. If left as is, the forgone revenue could grow to billions of dollars.

Additionally, the Government is reforming the Petroleum Resource Rent Tax to ensure Australians receive a fair return for our petroleum resources while not discouraging investment.

The Government is now extending funding for the ATO Tax Avoidance Taskforce until 30 June 2023, with a focus on multinationals. This is estimated to raise a further $4.6 billion in tax liabilities over the next four years.

The Government will also provide $42.1 million over four years to the ATO to increase activities to recover unpaid tax and superannuation liabilities, including from large corporate entities and high wealth individuals.

Taking action on tax integrity

Completed

Introduced the Multinational Anti-Avoidance Law

Introduced the Diverted Profits Tax

Introduced protections for tax whistleblowers

Extended GST to imported digital products and services and on low value imported goods

Being implemented

Closing loopholes for stapled structures

Extending GST to offshore sellers of hotel bookings in Australia

Reforming the Petroleum Resource Rent Tax

New measures

Extending the ATO Tax Avoidance Taskforce to 2023, with a focus on multinationals, big business and high wealth individuals

Increasing engagement and on time payment of tax and superannuation liabilities by large corporate entities and high wealth individuals

Cracking down on organised crime and the black economy

Engaging in the black economy harms businesses doing the right thing and makes it harder for the Government to provide the essential services that Australians rely on. That is why the Government is continuing to combat the harm that the black economy is doing to honest individuals, businesses and the Australian community.

The Government has already taken action to reduce the impact of the black economy. Our measures are estimated to return over $5 billion to the budget to fund essential services. Since 1 July 2018:

  • Businesses cannot manufacture, distribute, possess or use software to let them hide their sales to reduce the taxes they owe.
  • The Australian Taxation Office has raised over $500 million in liabilities through nearly 106,000 interactions with businesses including over 5,500 mobile strike team visits, to tackle black economy behaviour.
  • The Illicit Tobacco Taskforce has seized in excess of 71 tonnes of smuggled tobacco and approximately 103 million cigarettes, equivalent to more than $161 million in evaded tobacco duty.

From 1 July 2019, the Government will progress additional measures, including:

  • Ensuring people in certain high‑risk industries cannot hide or under‑report their income.
  • Making it harder for businesses to pay cash wages to staff while also evading their obligations to report the income.
  • Requiring businesses to have a good tax record when tendering for large Government contracts.

In this Budget, the Government will strengthen the Australian Business Number (ABN) system to disrupt black economy behaviour and target ABN misuse, generating an additional $22.2 million gain to the budget over the forward estimates. This measure will better align an ABN holder’s obligations with community expectations of compliant and honest business behaviour.

Appendix: Summary of lower taxes for hard-working Australians

Summary of changes to rates and thresholds

Rates and thresholds under the Government's enhanced Personal Income Tax Plan
Rates from 2017-18 to 2023-24 Thresholds in 2017-18 New thresholds from 2018-19 to 2021-22 New thresholds from 2022-23 to 2023-24
Nil Up to $18,200 Up to $18,200 Up to $18,200
19 per cent $18,201 - $37,000 $18,201 - $37,000 $18,201 - $45,000
32.5 per cent $37,001 - $87,000 $37,001 - $90,000 $45,001 - $120,000
37 per cent $87,001 - $180,000 $90,001 - $180,000 $120,001 - $180,000
45 per cent Above $180,000 Above $180,000 Above $180,000
Low and middle income tax offset - Up to $1,080 -
Low income tax offset Up to $445 Up to $445 Up to $700

 

Rates from 2024-25 New thresholds from 2024-25
Nil Up to $18,200
19 per cent $18,201 – $45,000
30 per cent $45,001 – $200,000
45 per cent Above $200,000
Low income tax offset Up to $700

Cumulative tax relief
2018-19 to 2024-25

The table below sums the annual benefit at different income levels under the enhanced Personal Income Tax Plan. The benefits are summed from 2018-19 through to the final year of the changes in 2024-25.

Cumulative tax relief and tax paid from 2018-19 to 2024-25*
Cumulative tax relief and tax paid from 2018-19 to 2024-25*
Taxable income $30,000 $50,000 $80,000 $90,000 $120,000 $140,000 $160,000 $200,000
Tax paid
($)
Tax relief
($)
Tax paid
($)
Tax relief
($)
Tax paid
($)
Tax relief
($)
Tax paid
($)
Tax relief
($)
Tax paid
($)
Tax relief
($)
Tax paid
($)
Tax relief
($)
Tax paid
($)
Tax relief
($)
Tax paid
($)
Tax relief
($)
2018-19 2,142 255 7,467 1,080 18,067 1,080 21,517 1,215 34,117 315 42,097 135 49,897 135 67,097 135
2019-20 4,284 510 14,934 2,160 36,134 2,160 43,034 2,430 68,234 630 84,194 270 99,794 270 134,194 270
2020-21 6,426 765 22,401 3,240 54,201 3,240 64,551 3,645 102,351 945 126,291 405 149,691 405 201,291 405
2021-22 8,568 1,020 29,868 4,320 72,268 4,320 86,068 4,860 136,468 1,260 168,388 540 199,588 540 268,388 540
2022-23 10,710 1,275 37,335 5,400 90,335 5,400 107,585 6,075 168,335 3,825 208,055 3,105 247,055 3,105 333,055 3,105
2023-24 12,852 1,530 44,802 6,480 108,402 6,480 129,102 7,290 200,202 6,390 247,722 5,670 294,522 5,670 397,722 5,670
2024-25 14,994 1,785 52,144 7,685 125,594 8,435 149,494 9,630 230,194 10,830 284,114 11,510 337,314 12,910 453,314 17,310

* The cumulative tax relief is the sum of an individual's tax relief provided by the enhanced Personal Income Tax Plan over the years from 2018-19, compared to 2017-18 settings. Tax paid is presented after incorporating the tax relief and includes the Medicare levy (with 2017-18 Medicare levy single low-income thresholds).

Dual income couple — equal income split
Change in household tax paid

  2018-19 2022-23 2024-25
Taxable Income - Spouse 1
($)
Taxable Income - Spouse 2
($)
Household Taxable Income
($)
Tax liability in 2017-18
($)
Tax liability
($)
Tax relief
($)
Tax liability
($)
Tax relief
($)
Tax liability
($)
Tax relief
($)
30,000 30,000 60,000 4,794 4,284 510 4,284 510 4,284 510
35,000 35,000 70,000 6,894 6,384 510 6,384 510 6,384 510
40,000 40,000 80,000 9,894 8,934 960 8,734 1,160 8,734 1,160
45,000 45,000 90,000 13,494 11,784 1,710 11,334 2,160 11,334 2,160
50,000 50,000 100,000 17,094 14,934 2,160 14,934 2,160 14,684 2,410
55,000 55,000 110,000 20,694 18,534 2,160 18,534 2,160 18,034 2,660
60,000 60,000 120,000 24,294 22,134 2,160 22,134 2,160 21,384 2,910
65,000 65,000 130,000 27,894 25,734 2,160 25,734 2,160 24,734 3,160
70,000 70,000 140,000 31,394 29,234 2,160 29,234 2,160 27,984 3,410
75,000 75,000 150,000 34,844 32,684 2,160 32,684 2,160 31,184 3,660
80,000 80,000 160,000 38,294 36,134 2,160 36,134 2,160 34,384 3,910
85,000 85,000 170,000 41,744 39,584 2,160 39,584 2,160 37,584 4,160
90,000 90,000 180,000 45,464 43,034 2,430 43,034 2,430 40,784 4,680
100,000 100,000 200,000 53,264 51,434 1,830 49,934 3,330 47,184 6,080
110,000 110,000 220,000 61,064 59,834 1,230 56,834 4,230 53,584 7,480
120,000 120,000 240,000 68,864 68,234 630 63,734 5,130 59,984 8,880
130,000 130,000 260,000 76,664 76,394 270 71,534 5,130 66,384 10,280
140,000 140,000 280,000 84,464 84,194 270 79,334 5,130 72,784 11,680
160,000 160,000 320,000 100,064 99,794 270 94,934 5,130 85,584 14,480
180,000 180,000 360,000 115,664 115,394 270 110,534 5,130 98,384 17,280
200,000 200,000 400,000 134,464 134,194 270 129,334 5,130 111,184 23,280

*The table provides stylised cameos based on the tax payable for these households, excluding any transfer payments. The tax liability and tax relief are calculated only taking into account the basic tax scales, low income tax offset, low and middle income tax offset and the Medicare levy (with 2017-18 Medicare levy family and single low-income thresholds where relevant). Actual outcomes for many individuals and households would differ.

Dual income couple — two-thirds and one-third split
Change in household tax paid

  2018-19 2022-23 2024-25
Taxable Income - Primary Earner
($)
Taxable Income - Spouse
($)
Household Taxable Income
($)
Tax liability in 2017-18
($)
Tax liability
($)
Tax relief
($)
Tax liability
($)
Tax relief
($)
Tax liability
($)
Tax relief
($)
40,200 19,800 60,000 5,019 4,524 495 4,419 600 4,419 600
46,900 23,100 70,000 8,029 6,777 1,253 6,694 1,335 6,647 1,383
53,600 26,400 80,000 11,398 10,063 1,335 10,063 1,335 9,848 1,550
60,300 29,700 90,000 14,589 13,254 1,335 13,254 1,335 12,872 1,718
67,000 33,000 100,000 17,689 16,354 1,335 16,354 1,335 15,804 1,885
73,700 36,300 110,000 20,694 19,359 1,335 19,359 1,335 18,641 2,053
80,400 39,600 120,000 24,088 22,558 1,530 22,468 1,620 21,583 2,505
87,100 42,900 130,000 27,592 25,810 1,782 25,638 1,955 24,585 3,007
93,800 46,200 140,000 31,393 29,347 2,046 28,927 2,466 27,677 3,716
100,500 49,500 150,000 35,194 33,214 1,980 32,427 2,768 30,927 4,268
107,200 52,800 160,000 38,995 37,216 1,779 35,926 3,069 34,176 4,819
113,900 56,100 170,000 42,796 41,218 1,578 39,426 3,371 37,426 5,371
120,600 59,400 180,000 46,597 45,220 1,377 42,952 3,645 40,675 5,922
134,000 66,000 200,000 54,199 52,984 1,215 50,554 3,645 47,174 7,025
147,400 72,600 220,000 61,712 60,497 1,215 58,067 3,645 53,584 8,128
160,800 79,200 240,000 69,215 68,000 1,215 65,570 3,645 59,984 9,231
174,200 85,800 260,000 76,718 75,503 1,215 73,073 3,645 66,384 10,334
187,600 92,400 280,000 85,072 83,794 1,278 81,184 3,888 72,784 12,288
200,000 100,000 300,000 93,864 92,814 1,050 89,634 4,230 79,184 14,680

* The table provides stylised cameos based on the tax payable for these households, excluding any transfer payments. The tax liability and tax relief are calculated only taking into account the basic tax scales, low income tax offset, low and middle income tax offset and the Medicare levy (with 2017-18 Medicare levy family and single low-income thresholds where relevant). Actual outcomes for many individuals and households would differ.

Single person household
Change in household tax paid

  2018-19 2022-23 2024-25
Taxable Income
($)
Tax liability in 2017-18
($)
Tax liability
($)
Tax relief
($)
Tax liability
($)
Tax relief
($)
Tax liability
($)
Tax relief
($)
30,000 2,397 2,142 255 2,142 255 2,142 255
35,000 3,447 3,192 255 3,192 255 3,192 255
40,000 4,947 4,467 480 4,367 580 4,367 580
45,000 6,747 5,892 855 5,667 1,080 5,667 1,080
50,000 8,547 7,467 1,080 7,467 1,080 7,342 1,205
55,000 10,347 9,267 1,080 9,267 1,080 9,017 1,330
60,000 12,147 11,067 1,080 11,067 1,080 10,692 1,455
65,000 13,947 12,867 1,080 12,867 1,080 12,367 1,580
70,000 15,697 14,617 1,080 14,617 1,080 13,992 1,705
75,000 17,422 16,342 1,080 16,342 1,080 15,592 1,830
80,000 19,147 18,067 1,080 18,067 1,080 17,192 1,955
85,000 20,872 19,792 1,080 19,792 1,080 18,792 2,080
90,000 22,732 21,517 1,215 21,517 1,215 20,392 2,340
100,000 26,632 25,717 915 24,967 1,665 23,592 3,040
110,000 30,532 29,917 615 28,417 2,115 26,792 3,740
120,000 34,432 34,117 315 31,867 2,565 29,992 4,440
130,000 38,332 38,197 135 35,767 2,565 33,192 5,140
140,000 42,232 42,097 135 39,667 2,565 36,392 5,840
160,000 50,032 49,897 135 47,467 2,565 42,792 7,240
180,000 57,832 57,697 135 55,267 2,565 49,192 8,640
200,000 67,232 67,097 135 64,667 2,565 55,592 11,640

* The table provides stylised cameos based on the tax payable for these households, excluding any transfer payments. The tax liability and tax relief are calculated only taking into account the basic tax scales, low income tax offset, low and middle income tax offset and the Medicare levy (with 2017-18 Medicare levy single low-income thresholds). Actual outcomes for many individuals and households would differ.

Household with single income earner
Change in household tax paid

  2018-19 2022-23 2024-25
Taxable Income - Primary Earner
($)
Taxable Income - Spouse
($)
Household Taxable Income
($)
Tax liability in 2017-18
($)
Tax liability
($)
Tax relief
($)
Tax liability
($)
Tax relief
($)
Tax liability
($)
Tax relief
($)
30,000 0 30,000 1,797 1,542 255 1,542 255 1,542 255
35,000 0 35,000 2,747 2,492 255 2,492 255 2,492 255
40,000 0 40,000 4,438 3,958 480 3,858 580 3,858 580
45,000 0 45,000 6,638 5,783 855 5,558 1,080 5,558 1,080
50,000 0 50,000 8,547 7,467 1,080 7,467 1,080 7,342 1,205
55,000 0 55,000 10,347 9,267 1,080 9,267 1,080 9,017 1,330
60,000 0 60,000 12,147 11,067 1,080 11,067 1,080 10,692 1,455
65,000 0 65,000 13,947 12,867 1,080 12,867 1,080 12,367 1,580
70,000 0 70,000 15,697 14,617 1,080 14,617 1,080 13,992 1,705
75,000 0 75,000 17,422 16,342 1,080 16,342 1,080 15,592 1,830
80,000 0 80,000 19,147 18,067 1,080 18,067 1,080 17,192 1,955
85,000 0 85,000 20,872 19,792 1,080 19,792 1,080 18,792 2,080
90,000 0 90,000 22,732 21,517 1,215 21,517 1,215 20,392 2,340
100,000 0 100,000 26,632 25,717 915 24,967 1,665 23,592 3,040
110,000 0 110,000 30,532 29,917 615 28,417 2,115 26,792 3,740
120,000 0 120,000 34,432 34,117 315 31,867 2,565 29,992 4,440
130,000 0 130,000 38,332 38,197 135 35,767 2,565 33,192 5,140
140,000 0 140,000 42,232 42,097 135 39,667 2,565 36,392 5,840
160,000 0 160,000 50,032 49,897 135 47,467 2,565 42,792 7,240
180,000 0 180,000 57,832 57,697 135 55,267 2,565 49,192 8,640
200,000 0 200,000 67,232 67,097 135 64,667 2,565 55,592 11,640

* The table provides stylised cameos based on the tax payable for these households, excluding any transfer payments. The tax liability and tax relief are calculated only taking into account the basic tax scales, low income tax offset, low and middle income tax offset and the Medicare levy (with 2017-18 Medicare levy family and single low-income thresholds where relevant). Actual outcomes for many individuals and households would differ.