The ATO has announced quite a few changes to Income Tax and Offsets for Individuals. We’ve covered them all for you below in detail.
The key income tax bracket changes for the 2020/21 year, as a result of the federal budget, are:
- the 19% rate ceiling lifted from $37,000 to $45,000; and
- the 32.5% tax bracket ceiling lifted from $90,000 to $120,000.
Low Income Tax Offset
Australian tax resident individuals whose income does not exceed $66,667 are entitled to the low income tax offset. The maximum low income tax offset is $700 for the 2020–21 and later income years. This has been increased from $445 as a result of the 2020–21 federal budget.
Low and Middle Income Tax Offset
Australian resident individuals whose income does not exceed $126,00 are entitled to the low and middle income tax offset. The low and middle income tax offset amount is between $255 and $1,080.
Limiting Deductions for Vacant Land
New legislation limiting deductions for the costs incurred in holding vacant land applies to costs incurred on or after 1 July 2019, even if the land was held before that date.
Amounts you do and do not need to include in your tax return
There have been a range of new assistance and support payments made available to individuals in response to the natural disasters and other circumstances that have impacted us during the 2019-20 & 2020-21 financial year. There are specific requirements around reporting Disaster Recovery Payments (DRP), payments in relation to 2019-20 bushfires and some COVID-19 grants, please contact us for advice regarding these payments.
General speaking, emergency assistance in the form of gifts from family and friends is not taxable.
If you have any questions whether these measures impact on you or if you can benefit from them, just contact us for a FREE Financial Health Check to get peace of mind.
Please Note: Many of the comments in this publication are general in nature and anyone intending to apply the information to practical circumstances should seek professional advice to independently verify their interpretation and the information’s applicability to their particular circumstances.