“Building a Better Tax system” What does this mean for you?
The Australian government has launched the Better Tax campaign in order to help inform the public of tax reforms coming into effect. Designed to “better Australia”, here is a look at what this plan is and its meaning for you.
What it is:
The Better Tax initiative is designed to help prevent big business and multinational corporations from evading their tax obligations. The revenue collected then goes into funding Australian public service efforts. The plan is working in conjunction with the ATOs Tax Avoidance Taskforce, which in the last two years collected $5.6 billion in extra tax from large corporations, multinationals, and wealthy individuals.
For individuals, Better Tax has introduced a revised Personal Income Tax Plan which aims to reduce 95% of peoples tax. They are also introducing,
- New low to middle-income tax offset: Offering immediate relief of up to $530 after an individual lodges their tax return for each income year from 2018-19 until 2021-22.
- Increase to income tax rate thresholds: Changing over the next seven years so less tax is paid by Australian taxpayers. The first change took effect on 1 July 2018 with future changes in 2022-23 and 2024-25.
- Reduction in the number of tax brackets: In order to simplify the system, in 2024-25 the tax system will move from five tax brackets to four.
This plan is aimed at reducing the strain on more than three million small to medium-sized businesses. Changes include,
- Tax cuts for incorporated small and medium businesses, with a turnover of less than $50 million per annum. These companies will move to a 25 per cent tax rate by 2021-22.
- The small business income tax offset; increasing the rate of the tax discount for unincorporated small businesses with a turnover below $5 million
- Increasing the instant asset write-off threshold from $20,000 to $25,000 and extending it until 30 June 2020. The increased threshold will apply from 29 January 2019, with legislation to be introduced.
- Increasing the small business entity turnover threshold from $2 million to $10 million per annum, extending access to a range of tax concessions.