The Government recently increased the thresholds for most personal tax rates for this financial year. This has been brought forward to help boost consumer spending and accelerate economic growth.
The Government recently announced that they have increased the thresholds for most personal tax rates for the 2020/21 financial year. This has been brought forward from 1 July 2022 to help boost consumer spending and accelerate economic growth.
New personal marginal tax rate
Tax rate | Income threshold for 2019/2020 (pa) | Income threshold for 2020/21 (pa) |
Nil | 0 - $18,200 | 0 - $18,200 |
19.0% | $18,201 - $37,000 | $18,201 - $45,000 |
32.5% | $37,001 - $90,000 | $45,001 - $120,000 |
37.0% | $90,001 - $180,000 | $120,001 - $180,000 |
45.0% | $180,000+ | $180,000+ |
What does this mean for your take home income?
Depending on your income, these new thresholds will mean more money in your pocket.
If you are an employee, you may have started to see more income being deposited into your bank account as a result of the reduced PAYG withholding tax.
However, as this change has been made part way through the 2020/21 financial year, you may receive the additional tax saving as either an additional payment from your employer or a tax refund when you lodge your income tax return.
While the Government has put this in place with the hope that it will boost consumer spending, it will be interesting to see if consumers choose to spend or save this amount over the next year.
Taxable income | Previous tax payable | New tax payable | Saving |
$20,000 | $0 | $0 | $0 |
$40,000 | $4,467 | $3,887 | $580 |
$60,000 | $11,067 | $9,987 | $1,080 |
$80,000 | $18,067 | $16,987 | $1,080 |
$100,000 | $25,717 | $24,187 | $1,530 |
$120,000 | $34,117 | $31,687 | $2,430 |
$140,000 | $42,097 | $39,667 | $2,430 |
$160,000 | $49,897 | $47,467 | $2,430 |
$180,000 | $57,697 | $55,267 | $2,430 |
$200,000 | $67,097 | $64,667 | $2,430 |
If you are an employee, you may have started to see more income being deposited into your bank account as a result of the reduced PAYG withholding tax.
However, as this change has been made part way through the 2020/21 financial year, you may receive the additional tax saving as either an additional payment from your employer or a tax refund when you lodge your income tax return.
While the Government has put this in place with the hope that it will boost consumer spending, it will be interesting to see if consumers choose to spend or save this amount over the next year.
