You may have read in the news this week that many Australians will have less money in their pockets in the next financial year. This is due to the low and middle-income tax offset ending on 30 June 2021.

As part of the Federal Budget 2020, the treasurer announced an extension of the low and middle -income tax offset until 30 June 2021. This means that when you lodge your tax return for the 20/21 tax year and earn less than $126,000, you will receive a tax relief refund on assessment. If you have already lodged your individual tax return, you may have already received the tax relief. Remember the individual tax return deadline through Taxpro is 15th May 2021.

The low and middle-income tax offset meant that eligible individuals earning between $48,000 and $90,000 had tax relief of up to $1080. For those earning between $37,001 – $47,999, they had tax relief from $255 to $1080, and anyone who earned up to $37,000 had their tax reduced by up to $255.

This was always a temporary measure and an additional tax relief for 20/21 to support consumption and ease the cost-of-living pressures. As this extension comes to an end, individuals within this income range will no longer have that tax relief in the 21/22 financial year.

As this will affect more than 10 million Australians and research is suggesting it will impact the economy through less spending, there are calls to the Government to deliver tax cuts to low and middle-income earners in the 21/22 financial year, but as yet no announcements have been made.

As always, if you have any questions, or concerns relating to your tax obligations then please call us on 08 9240 7629 or email admin@taxproaustralia.com.au