What tax cut? The big budget fizzer

After much pomp and ceremony, and customary media leaks in the lead up, the Federal budget has been delivered.

And I’m afraid to say that once again, it offers little to ordinary Australian income earners, and much to corporate Australia.

Treasurer Scott Morrison is making a big deal about the ‘generous’ new tax thresholds that he says will help out ‘average Australians’.


I don’t quite agree; I’ll get to that in a moment. But corporate Australia? They have something to celebrate! They’re being gifted a whopping tax cut, with the company tax rate to fall from 30 per cent to 25 per cent over next decade.

If a company were to post a profit of $1 million each year, they would save $50,000 off their tax bill by the time these tax cuts flow through. That’s a generous chunk of change remaining in their ledger.

For personal tax payers, on the other, the newly announced tax cut will only make a difference – and a negligible one at that – to a very small sub-set of income earners.

Because what the government has done is increased just one tax bracket.

Right now, if you earn over $80,000 per year, every dollar you make between $80-$180k is taxed at 37c (plus 2c Medicare Levy).

As of July 1, those earning $80,000 or more are going to pay slightly less tax, as the current threshold of $80,000 will be increased to $87,000.

As a taxpayer, this means you have the potential to save 4.5c per dollar on up to $7,000 worth of taxable income.

I know, I know, I lost you with all of that math – but let me break it down for you.

If you currently earn $90,000, the amount of tax you pay annually is $20,137 (excluding Medicare).

Under the new tax brackets, you’ll pay $19,822 (excluding Medicare)..

So over 12 months, you stand to save a grand total of…. Drum roll please… $315. It’s a little over $6 per week.

If you earn more than $80k – which let’s be honest isn’t exactly an ‘average’ wage, it’s getting right up there – the government is going to shout you a coffee and a muffin each week.

Let’s not get too excited about this.

Corporate Australia has something big to celebrate this week. But for average Aussies, ain’t much going to change.

The Meddler

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