How YOU could receive new tax cuts two years earlier if unemployment rises and Australia's economy slows down since the GFC ten years ago
- The second phase of the income tax reduction will come into effect in July 2022
- The Australian economy is growing at the slowest pace since 2009 during the GFC
- Retail sales recorded the largest decline since the last recession in mid-1991
- Tax agent H&R Block said that a weak economy has a justified need to implement spending cuts
- Treasurer Josh Frydenberg did not seem to exclude this idea completely
Australians can get a new round of tax cuts two years earlier than planned if unemployment rises and the economy stops at a slow pace in a decade.
From July 2022, the 32.5 percent personal income tax bracket will be moved from $ 90,000 to $ 120,000.
For low-income people, the 19 percent income tax bracket increases from $ 41,000 to $ 45,000.
However, the federal government can bring these tax reductions in phase two to 2020 or 2021.
Australians can receive a new round of tax cuts two years earlier than planned if unemployment rises and the economy slows down for a decade (stock image)
TAXES AT A GLANCE
$ 255 tax cuts for those earning between $ 18,200 and $ 37,000 were legally committed in July.
Those who earned $ 48,000 to $ 90,000 saw their tax cuts double from $ 530 to $ 1,080.
The government's package of tax cuts announced in the April budget consisted of three phases.
Phase one raised the threshold for the 32.5 percent personal income tax bracket from $ 87,000 to $ 90,000 over four years to 2022.
Phase two, from July 1, 2022, the 19 percent income tax bracket would rise from $ 41,000 to $ 45,000. It also raises the 32.5 percent personal income tax bracket from $ 90,000 to $ 120,000.
Phase three, if the coalition were to get its way, the 37 percent tax limit would be abolished from July 1, 2024 and a new 30 percent tax limit created for all individuals earning between $ 45.001 and $ 200,000. The number of tax brackets would be reduced from five to four for the first time since 1984
The Australian economy is growing at the slowest pace since the global financial crisis ten years ago, even though the Reserve Bank of Australia has lowered interest rates to a low of only 0.75 percent.
Mark Chapman, director of H&R Block, said the circumstance justifies bringing the next round of planned tax cuts forward by two years.
& # 39; Yes. Given the fragile state of the economy and the repeated hints from the RBA that more action is needed to boost growth, it would certainly be useful to move the tax cuts in phase two from 2022 to 2020 & # 39 ;, he said Daily Mail Australia.
Treasurer Josh Frydenberg did not seem to exclude this idea completely when asked about the prospect of bringing forward the second phase of tax cuts.
& # 39; Now I am clearly aware that there is a phased approach to our tax cuts that we have established, but we are focused on delivering a stronger economy and we are always looking for ways to reduce taxes , & # 39; he told Sky News Australia on Thursday.
The first round of tax cuts, which gave $ 1,080 to 4.5 million Australians who earned $ 48,000 to $ 90,000, has not stimulated the economy so far.
Even before the April tax cuts were introduced in July, the Australian economy was already growing at just 1.4 percent, a level less than half the average since the last recession in 1991.
Treasurer Josh Frydenberg (together with wife Amie) did not seem to exclude this idea completely when asked about the prospect of bringing forward the second phase of tax cuts
Retail sales suffered the largest annual decline in 28 years in September, the Australian Bureau of Statistics revealed last week.
In October, Australia's unemployment rate increased from 5.2 percent to 5.3 percent as 19,000 jobs were lost, indicating that the first time employment had shrunk in 17 months.
Mr. Chapman said that the first phase of tax cuts had failed to stop the decline in consumer spending, as millions of taxpayers rushed to file their annual tax returns.
& # 39; The effect of the tax cut has not penetrated into consumer spending, which remains depressed & he said.
& # 39; Anyway, the presence of the compensation did not stimulate the tax refund as much as the government had hoped, possibly because many taxpayers were quickly accommodated by myTax and missed valuable tax deductions that they could have claimed. & # 39 ;
This chart shows how tax cuts are broken down by bracket: 4.5 million taxpayers receive the full $ 1,080 reduction
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