The Turnbull Government has taken further steps to ensure hard-working average full-time wage earners can keep more of what they earn.
Today I introduced legislation to increase the middle income tax bracket from $80,000 to $87,000, in line with the Turnbull Government’s 2016-17 Budget commitment.
This will prevent around 500,000 taxpayers going onto the higher 37 per cent marginal tax rate.
By pushing out the tax threshold on the middle tax bracket we’ll keep average full time wage earners on the lower rate of 32.5 per cent for longer.
This will reward and encourage hard working Australians for doing overtime, picking up extra shifts, earning a promotion or getting a higher paying job, instead of penalising them with a higher tax rate.
This modest tax relief demonstrates that wherever possible the Turnbull Government will leave the money that Australians earn in their pockets.
These tax cuts came into effect from 1 July 2016. Once the legislation is passed individuals will get every dollar of their personal income tax relief backdated to 1 July 2016.
This may mean a larger tax refund for some but it will mean lower tax is paid across the whole year for everyone.
While these are modest changes to our personal income tax system, they are important. They are also affordable, having been offset elsewhere in the Budget, not funded by higher deficits or higher borrowing. Increasing the 32.5 per cent marginal tax rate threshold from $80,000 to $87,000 will provide tax relief of up to $315 per year for those full-time wage earners on taxable incomes above $80,000.
Australians understand that our outdated tax system is punishing hard work, hindering growth, limiting opportunity and hampering innovation.
A key challenge for any government is to ensure that as many people as possible are engaged in the economy and participating in work.
The Treasury Laws Amendment (Income Tax Relief) Bill 2016 will give hard working Australians greater incentive to earn more without being taxed more. Reducing the burden of tax will boost new investment, create and support jobs and increase real wages.