Millions of Australians are set to receive between $255 and $1080 in tax cuts for the 2018-19 financial year.
How soon you get yours will depend on when you lodge your tax return.
The tax cut should appear automatically in bank accounts as part of their refund after they lodge their 2018-19 tax return.
“Once the law receives Royal Assent, we are ready to update our processing systems,” an ATO spokesperson told ABC News.
“We will automatically include any new offset amounts taxpayers are entitled to when we process their tax returns.
Taxpayers don’t need to do anything different to receive the offset.
It seems media coverage of the tax cuts has contributed to huge taxpayer interest in how, and how soon, they will receive them.
“For example, we received over 90,000 calls yesterday to our call centres.
“This may be related to changes to payment summaries that now see this data reported to the ATO and available in our online systems as an income statement.”
Don’t lodge return too soon
The Australian Taxation Office has said it would aim to process online tax returns within two weeks, but has previously warned Australians not to lodge too early.
Assistant commissioner Karen Foat has asked taxpayers to wait until around August to lodge.
“Most employers have until July 31 to finalise their employees’ income statements so, we strongly encourage taxpayers to wait a few weeks before lodging their tax return,” she said.
“If you lodge your tax return before your income statement is tax ready, your employer might make changes, and you may need to lodge an amendment. In some cases, additional tax and interest may be payable.”
Waiting also allows more time for other information, such as from banks, health funds and government agencies, to be pre-filled peoples’ tax returns, she said.
If I owe the ATO money, will the tax cuts help me?
The federal government’s tax plan includes changes to the Low and Middle Income Tax Offset (LMITO), which reduces the amount of tax low and middle income earners need to pay.
The Federal Government estimates that 4.5 million Australian taxpayers will be eligible for the full LMITO of $1080, while another 5.6 million will receive a partial LMITO.
The tax cuts can offset your debts to the ATO, but it all depends how big those debts are.
KPMG tax partner Raffi Tenenbaum said an income tax refund will always be used to offset any unpaid ATO debts, and sometimes other government liabilities, with the balance being refunded to the taxpayer.
“So the LMITO will be no different — if you owe the ATO money and are entitled to the new $1080 offset, that entitlement will firstly be applied against your existing ATO debt before you get the rest.”
The government has increased the base and maximum amount of the LMITO to $255 (up from $200) and $1080 (up from $530). It means:
- Those on less than $37,000 get $255
- Those on between $37,000 and $48,000 get $255, plus 7.5 cents per dollar for every dollar between $37,000 and $48,000
- Those on between $48,000 and $90,000 get a total maximum of $1080
- For those with taxable incomes of $90,000 to $126,000 the offset will phase out at a rate of three cents in the dollar.
Still waiting for your payment summary? Most are
The ATO has said some people may not receive a payment summary directly from their employer this financial year.
|Income||Tax cut from 2018-19||Tax cut from 2022-23||Tax cut from 2024-25|
|$30,000||$255 per year||$255 per year||$255 per year|
|$60,000||$1080 per year||$1080 per year||$1455 per year|
|$90,000||$1215 per year||$1215 per year||$2340 per year|
|$120,000||$315 per year||$2565 per year||$4440 per year|
|$150,000||$135 per year||$2565 per year||$6540 per year|
|$180,000||$135 per year||$2565 per year||$8640 per year|
Note: Those earning more than $87,000 per year have benefited by up to $135 over the past financial year from the increase of the threshold for the 37 per cent tax rate from $87,000 to $90,000 a year.
Many employers are now reporting wages, tax and super information to the ATO each payday.
Ms Foat said about nine million Australians will be able to see their year-to-date salary and wages, PAYG withholding tax and any employer super contributions in almost real time.
Taxpayers who have linked their myGov accounts to ATO online services will receive a message when their income statement is tax ready, for agents this information will be available in pre-fill reports.
The ATO said, if taxpayers cannot access their information via myGov or if they lodge a paper return, they can contact the ATO on 13 28 61 for a copy of their income statement.