Winson-Talk

Budget 2008 - Personal Tax Cut

The tax cuts promised in the election were worth $31 billion over three years. The tax cuts will cost A$7.1 billion in 2008/09, A$9.8 billion in 2009/10, and A$13.9 billion in 2010/11.

From 1 July 2008:

• the Low Income Tax Offset (LITO) will increase from $750 to $1,200, providing an effective tax free threshold of $14,000 (up from $11,000) to those taxpayers eligible for the full LITO;
• the 30 per cent threshold will increase from $30,001 to $34,001; and
• the 40 per cent threshold will increase to $80,001 and the 45 per cent threshold will increase to $180,001, as announced in the 2007-08 Budget.

From 1 July 2009:

• the LITO will increase to $1,350, providing an effective tax free threshold for low income earners of $15,000;
• the 30 per cent threshold will increase to $35,001;
• the second top marginal rate will be cut from 40 to 38 per cent; and
• the top marginal rate will be cut from 45 to 43 per cent;

From 1 July 2010:

• the LITO will increase to $1,500, providing an effective tax free threshold for low income earners of $16,000;
• the 30 per cent threshold will increase to $37,001;
• the second top marginal rate will be cut from 38 to 37 per cent; and
• the top marginal rate will be cut from 43 to 42 per cent.

source : http://www.treasurer.gov.au/

The above tax rate is calculated base on taxable income of $50,000 for the year of 2007-2008 and 2008-2009. Compare the year of 2008-2009 with 2007-2008, there is a tax cut of $600 from the previous year. Take home pay for 2008-2009 is $40,250 compare to 2007-2008 which is $39,650.

source : http://www.taxcalc.com.au/0809.html

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