Australians facing cost of living pressures will receive some extra financial help and reward for hard work, with the Government's third round of tax cuts starting tomorrow.
Australians have worked hard to keep our economy strong during the global recession, and they deserve any help we can provide in the face of cost of living pressures.
The tax relief starting tomorrow has been designed to boost workforce participation and strengthen the Australian economy, as well as helping with strained household budgets.
This third round of tax relief is part of the strong economic management that has seen Australia fight off recession and keep unemployment around half the levels in the US and Europe.
It adds to recent support for low and middle-income Australians and self-funded retirees through stimulus payments, as well as the major boost to the Age Pension and the historic paid parental leave scheme delivered by the Government.
This year's tax cuts will mean the Government has delivered income tax relief in all three of its Budgets so far, as well other financial support through the Child Care Rebate and Education Tax Refund.
For someone earning $50,000 a year, the tax cuts starting tomorrow will mean:
- An extra $450 in the pocket each year; and
- An extra $1,750 in the pocket each year since the Government came to office, when combined with tax cuts delivered in the past two years.
Compared with their income tax liability for 2007-08 (and excluding the Medicare levy) by 2010‑11:
- a person earning $20,000 will have received an income tax cut of around 56 per cent,
- a person earning $50,000 will have received an income tax cut of around 18 per cent; and
- a person earning $80,000 will have received an income tax cut of around 8 per cent.
From 1 July 2010:
- the LITO will increase from $1,350 to $1,500. This means the effective tax free threshold for taxpayers eligible for the full low income tax offset will increase from $15,000 to $16,000;
- the 30 per cent marginal tax rate threshold will rise from $35,001 to $37,001;
- the 38 per cent marginal tax rate will be reduced to 37 per cent; and
the amount of income a senior Australian eligible for the senior Australian tax offset (SATO) can earn before they incur an income tax liability will increase from $29,867 to $30,685 for singles, and from $25,680 to $26,680 for each member of a couple.
Lifting the effective tax free threshold for low-income workers for the third time will continue to provide more incentive to participate in the workforce, particularly for part-time and older workers.
Together with the Government's historic investment in skills and training, this will help expand the capacity of our economy so we can grow sustainably into the future.
Families with children in approved care are eligible for the Government's Child Care Rebate which pays for up to 50 per cent of out-of-pocket childcare expenses, up to $7,500 per child per year.
All of these measures are part of the Government's plan to strengthen Australia's economy so it delivers for Australian families facing cost of living pressures.