On 6 October 2020, Josh Frydenberg announced his second Federal Budget as Treasurer. It was a world away from his first, just over 18 months ago, where he had claimed that Australia was “back in the black”.
Unfortunately Josh’s vision of 2020 was not 20/20 and this budget is billed as an ‘Economic Recovery Plan for Australia’, focused on creating jobs and rebuilding the economy.
The main headline measures are bringing forward tax cuts already announced in the 2018 and 2019 Federal Budgets, but there are also some interesting announcements around superannuation.
The main announcements affecting tax, superannuation and older Australians are outlined below.
Tax announcements
Stage 2 of the Personal Income Tax Plan will be brought forward to this financial year, providing 11 million Australians with an immediate tax cut. There is also a further additional benefit whereby the LMITO (low and middle income tax offset) will be provided for another year and the LITO (low income tax offset) was increased from $445 to $700.
The government estimate that more than 7 million Australians should receive tax relief of $2,000 or more for this financial year (compared with 2017-18). Treasury has provided the following table that provides examples of tax relief for different income levels, comparing 2017-18 (before the Personal Income Tax Plan took effect) with the 2020-21 financial year.
Taxable income
2017-18 tax liability
2020-21 tax liability
$ change in tax
% change in tax
$40,000
$4,947
$3,887
-$1,060
-21.4%
$60,000
$12,147
$9,987
-$2,160
-17.8%
$80,000
$19,147
$16,987
-$2,160
-11.3%
$100,000
$26,632
$24,187
-$2,445
-9.2%
$120,000
$34,432
$31,687
-$2,745
-8.0%
$140,000
$42,232
$39,667
-$2,565
-6.1%
$160,000
$50,032
$47,467
-$2,565
-5.1%
$180,000
$57,832
$55,267
-$2,565
-4.4%
$200,000
$67,232
$64,667
-$2,565
-3.8%
Source: Treasury. Note these are only based on basic tax scales, LITO, LMITO and the Medicare levy. Actual outcomes for individuals may differ.
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