The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Wayne Swan

Wayne Swan

Deputy Prime Minister and Treasurer

3 December 2007 - 27 June 2013

30 June 2008

NO.078

Tax Relief Starts Tomorrow

Millions of Australian families will receive some much-needed relief from cost of living pressures from tomorrow, with the first instalment of the Rudd Government's $46.7 billion tax package due to start hitting pay packets across the country.

The tax relief starting tomorrow is targeted particularly at low and middle-income earners, with a worker earning $40,000 per annum set to receive an extra $20.19 per week, or $1,050 per annum. (See Appendix for tax benefit Ready Reckoner)

There's no doubt that many family budgets are under serious financial strain - especially low and middle-income families who missed out on substantial tax relief under the Liberals.

Tomorrow's tax relief is designed to tip the scales back in favour of working families struggling with the impacts of the global oil shock as well as eight interest rate rises in the past three years.

The tax cuts are part of the Rudd Government's $55 billion Working Families Support Package, which also includes substantial help with childcare and education costs, starting from tomorrow.

This Support Package will mean a typical young family with two children will be $52 per week – or around $2700 for the year – better off.

Hard-working families bringing up the next generation of Australians are the backbone of our economy and they deserve every dollar of these tax cuts.

The tax cuts starting tomorrow will allow Australians to earn up to $14,000 in 2008-09 without incurring a tax liability (up from $11,000 in 2007‑08), providing a real benefit to part‑time workers.

From tomorrow:

  • The 30 per cent threshold will be raised from $30,001 to $34,001
  • The low income tax offset (LITO) will increase from $750 to $1,200
  • The 40 per cent threshold will increase from $75,001 to $80,001
  • The 45 per cent threshold will increase from $150,001 to $180,01

From 1 July 2009:

  • The 30 per cent threshold will increase from $34,001 to $35,001;
  • The LITO will increase from $1,200 to $1,350, meaning the effective tax free threshold for people earning $30,000 or less will increase to $15,000; and
  • The 40 per cent tax rate will be reduced to 38 per cent.

From 1 July 2010:

  • The 30 per cent threshold will increase from $35,001 to $37,001;
  • The LITO will increase from $1,350 to $1,500, meaning the effective tax free threshold for people earning $30,000 or less will increase to $16,000; and
  • The 38 per cent tax rate will be reduced to 37 per cent.

The Rudd Government's tax package will also boost labour force participation at a time when acute skills and labour shortages are feeding inflationary pressures.

The personal income tax rate reductions are carefully designed to enhance incentives for labour force participation. Treasury modelling indicates the tax cuts alone will lift aggregate labour supply, by around 65,000 workers in the medium term.

This extra supply of labour, together with the anticipated increase in the hours worked by workers currently in the workforce, will mean around 2.5 million additional hours of work in the economy each week.

MACKAY
30 June 2008

 


 

Appendix

Single Taxpayer

Taxable income

Weekly

Annual

2008-09

2009-10

2010-11

2008-09

2009-10

2010-11

 

$

$

$

$

$

$

$15,000

8.65

11.54

11.54

450.00

600.00

600.00

$20,000

8.65

11.54

14.42

450.00

600.00

750.00

$25,000

8.65

11.54

14.42

450.00

600.00

750.00

$30,000

8.65

11.54

14.42

450.00

600.00

750.00

$35,000

20.19

25.96

28.85

1,050.00

1,350.00

1,500.00

$40,000

20.19

25.96

34.62

1,050.00

1,350.00

1,800.00

$45,000

20.19

25.96

34.62

1,050.00

1,350.00

1,800.00

$50,000

19.23

25.00

33.65

1,000.00

1,300.00

1,750.00

$55,000

15.38

21.15

29.81

800.00

1,100.00

1,550.00

$60,000

11.54

17.31

25.96

600.00

900.00

1,350.00

$65,000

11.54

14.42

22.12

600.00

750.00

1,150.00

$70,000

11.54

14.42

20.19

600.00

750.00

1,050.00

$75,000

11.54

14.42

20.19

600.00

750.00

1,050.00

$80,000

21.15

24.04

29.81

1,100.00

1,250.00

1,550.00

$85,000

21.15

25.96

32.69

1,100.00

1,350.00

1,700.00

$90,000

21.15

27.88

35.58

1,100.00

1,450.00

1,850.00

$95,000

21.15

29.81

38.46

1,100.00

1,550.00

2,000.00

$100,000

21.15

31.73

41.35

1,100.00

1,650.00

2,150.00

$105,000

21.15

33.65

44.23

1,100.00

1,750.00

2,300.00

$110,000

21.15

35.58

47.12

1,100.00

1,850.00

2,450.00

$115,000

21.15

37.50

50.00

1,100.00

1,950.00

2,600.00

$120,000

21.15

39.42

52.88

1,100.00

2,050.00

2,750.00

$125,000

21.15

41.35

55.77

1,100.00

2,150.00

2,900.00

$130,000

21.15

43.27

58.65

1,100.00

2,250.00

3,050.00

$135,000

21.15

45.19

61.54

1,100.00

2,350.00

3,200.00

$140,000

21.15

47.12

64.42

1,100.00

2,450.00

3,350.00

$145,000

21.15

49.04

67.31

1,100.00

2,550.00

3,500.00

$150,000

21.15

50.96

70.19

1,100.00

2,650.00

3,650.00

$155,000

25.96

57.69

77.88

1,350.00

3,000.00

4,050.00

$160,000

30.77

64.42

85.58

1,600.00

3,350.00

4,450.00

$165,000

35.58

71.15

93.27

1,850.00

3,700.00

4,850.00

$170,000

40.38

77.88

100.96

2,100.00

4,050.00

5,250.00

$175,000

45.19

84.62

108.65

2,350.00

4,400.00

5,650.00