The federal government has deferred $1 billion in forecast pay-as-you-go tax receipts from businesses and high-income earners – a move that will ease the tax burden on millions of Australians.
The change will affect instalments payable to the Australian Taxation Office for an estimated 2.2 million people paying income tax instalments and about 81,000 paying GST instalments in the next financial year.
“The decision to suspend the indexation of tax instalments is yet another tangible way the Morrison government is supporting Australians as we respond to the COVID-19 crisis,” Assistant Treasurer Michael Sukkar said on Wednesday.
Instalments help spread taxpayer obligations over the year and can reduce a taxpayers’ balance on assessment.
Indexation is used to gauge a range of instalment amounts annually to reflect anticipated income growth.
To calculate instalment amounts that must be paid throughout the year, the tax office uses historical gross domestic outcomes. Other payments such as pensions are indexed against the consumer price index.
Meanwhile, a nine-week recovery in consumer confidence has come to an abrupt halt.
The weekly ANZ-Morgan consumer confidence index, released on Wednesday, dropped 1.3 per cent.
“Last week’s fall in confidence can be seen as more of a consolidating move than weakness, as it has come after the most extended stretch of gains in the history of the weekly survey,” ANZ head of Australian economics David Plank said.
The index collapsed in late March as Australians feared the worst from the COVID-19 pandemic. It has since reclaimed much of the lost ground as the virus was contained.
Treasury secretary Steven Kennedy told a Senate committee on Tuesday the economic hit from the coronavirus will be smaller than initially expected because the health outlook has improved.
“However, this will still be the single biggest economic shock Australia has faced in living memory,” he said.
Having earlier predicted the unemployment rate hitting 10 per cent in the June quarter, Treasury now sees the jobless level at about 8 per cent by September.
The Westpac-Melbourne Institute monthly survey of consumer sentiment is due later on Wednesday.