The 2021-22 Federal Budget has been handed down by Treasurer Josh Frydenberg.
5 eca Budget update covers some of critical issues that could impact you and your family.
Low and middle income tax offset extended
As widely predicted, the Low and Middle Income Tax Offset (LMITO) will be extended for another year. The LMITO provides a reduction in tax of up to $1,080 for individuals with a taxable income of up to $126,000 and will be retained for the 2021-22 year. (Date of effect From 1 July 2021 to 30 June 2022)
$37,000 or less
Between $37,001 & $48,000
$255 plus 7.5 cents for every dollar above $37,000,
up to a maximum of $1,080
Between $48,001 & $90,000$1,080
Between $90,001 & $126,000
$1,080 minus 3 cents for every dollar of the amount above $90,000
The tax offset is triggered when a taxpayer lodges their tax return.
Medicare levy low income threshold
The Government will increase the Medicare levy low-income thresholds for singles, families, and seniors and pensioners from 1 July 2020 to take account of recent movements in the CPI so that low-income taxpayers generally continue to be exempt from paying the Medicare levy. (Date of effect: 1 July 2020)
Single seniors and pensioners
Family threshold for seniors and pensioners
For each dependent child or student, the family income thresholds increase by a further $3,597 instead of the previous amount of $3,533.
$250 self-education expense reduction removed
Currently, individuals claiming a deduction for self-education expenses sometimes need to reduce the deductible amount by up to $250. The rules in this area are complex as they only apply to self-education expenses that fall within a specific category and certain non-deductible expenses can be offset against the $250 reduction. This reduction will be removed, which should make it easier for individuals to calculate their self-education deductions. (Date of effect: First income year after the date of Royal Assent of the enabling legislation)
We’ll keep you up to date as the detail of these measures comes to hand.