Legislated income tax cuts are tipped to be backdated and waved through Parliament once the government delivers its federal budget tonight.
Income tax cuts tipped to be brought forward, backdated
The federal government is now expected to bring forward its already legislated stage 2 tax cuts and backdate it to 1 July 2020.
The tax cuts, which were scheduled to start in July 2022, will see the top threshold of the 19 per cent income tax bracket increased from $37,000 to $45,000, and the top threshold for the 32.5 per cent tax bracket raised from $90,000 to $120,000.
Labor has also indicated that it will throw its support behind the brought-forward stage 2 cuts.
“We, of course, argued last year that stage 2 of the tax cuts should be brought forward. So, there will be nothing surprising if we took a position consistent with that,” said opposition leader Anthony Albanese.
The ABC has also reported that the government is expected to factor in the tax cuts from the first four months of this financial year into the remaining eight months to speed up access to the measure — a move that Finance Minister Mathias Cormann has hinted at.
“If there is a measure to bring forward some income tax cuts and they are supported by both sides of politics, they are legislated or they are at least supported, then the ATO would be able to pass that on very quickly,” Mr Cormann said.
Labor, however, remains opposed to the stage 3 cuts which will see a flat 30 per cent rate for incomes between $45,000 and $200,000, and 45 per cent as the highest rate for incomes above $200,000.