Count Report Spring 2019
to the Spring edition of The Count Report
Spring is in the air, which means it’s time to shake off the winter blues and look forward to the hot months ahead. Every day, issues like climate change, oceanic plastic pollution and threats of species extinction appear on our news feeds. Wondering how you can help combat these challenges? Our ethical investing article explains how you can choose investments that have a positive global impact while avoiding companies
Make the most of your tax cut
The government’s latest tax cuts could give you more money in your pocket. Here’s how to put those extra dollars to good use.
On 4 July 2019, the Australian Government passed a law that will provide tax cuts to most Australians. These cuts are in addition to the tax relief offered by the Coalition’s Personal Income Tax Plan, which took effect in June 2018. These tax changes will be delivered in three stages:
From 1 July 2018 until 30 June 2022 the temporary Low and Middle Income Tax Offset (LMITO) will be introduced. This means that people earning less than $126,000 a year will receive a tax offset worth between $255 and $1,080. During this time, people earning less than $66,667 will also still be eligible for the Low Income Tax Offset (LITO) worth up to $445.
From 1 July 2022 the LMITO will cease, but people earning below $66,667 will still be entitled to a LITO of up to $700. What’s more, the threshold for the 19% personal income tax bracket will increase from $41,000 to $45,000. This is on top of previous legislated tax cuts, so people earning between $37,000 and $45,000 a year will pay 19% tax instead of 32.5%.
From the 2024–25 financial year Australians earning between $45,000 and $120,000 will have their marginal tax rate reduced from 32.5% to 30%, those earning between $120,000 and $180,000 will have their marginal tax rate reduced from 37% to 30%, and those earning between $180,000 and $200,000 will have their marginal tax rate reduced from 45% to 30%.
What could this mean for you?
If you earn between $37,000 and $126,000, you could be eligible for a tax refund worth between $255 and $1080 on your 2018–19 tax return. These tax offsets will then continue for the next four years. And if you earn less than $66,667 you may also be entitled to an additional offset each year. To claim your offsets, you don’t have to do anything. Simply lodge your tax return and
the Australian Tax Office will work out how much you’re entitled to. Having some extra money up your sleeve is great, but it’s easy to blow it on little things. Here are some tips to help you make better use of your tax refund. Squirrel it away Is there a specific goal you’re saving towards, or could you do with some emergency funds? Consider ramping up your savings by putting your tax refund into a high-interest savings account and then adding to it each payday. By saving regularly, even small amounts can build up substantially over time. Clear your debts If you’re got credit card debt or a personal loan to pay off, it’s likely that you’re paying far more in interest than you could ever earn in a savings account. In this case, you might be better off putting your tax refund towards clearing your debts once and for all. Create an investment portfolio If you’re already debt-free and would like to start building wealth for the future, you might consider investing your tax refund in direct shares or a managed fund. When your investment pays dividends, you’ll also have the option to reinvest your earnings so your investment can grow even further.