One million workers who lodged their tax returns early will have up to 1080 reasons to “Thank God It’s Friday”.
The Australian Tax Office has confirmed it will start paying refunds on Friday to the early birds who lodged their tax returns quickly after July 1.
Workers have inundated the ATO with early returns this year in the hope of securing the tax cut bonus, doubling the normal rate of returns compared to the same time last year.
But at least some workers could be in for a nasty surprise, with accountants warning taxpayers to remember that not everyone will get the full $1080 refund.
Workers earning under $37,000 will only get $255 back.
If you earn between $37,000 and $48,000, you will secure $255 plus 7.5 per cent of what is over $37,000.
That means anywhere between $255 and $1080.
The sweet spot is for workers earning between $48,000 and $90,000. They will secure the full $1080.
But workers earning between $90,000 and $126,000 start losing the $1080 on a sliding scale.
Any workers earning more than $126,000 gets nothing in this year’s round of tax cuts.
Treasurer Josh Frydenberg said while he was loath to give advice on how to spend the tax cuts, he did expect the extra cash will stimulate the economy.
“I can tell you they’re going to spend it in Australia,” Mr Frydenberg said.
“They’re going to spend it on home improvements. They’re going to spend it on taking a domestic holiday. They’re going to spend it on their kids and their grandchildren and that’s where the money should be spent, on things that are important to Australians.
“It’s their money and we believe that not only should they earn more, but they should be able keep more of what they earn.”
Reserve Bank governor Philip Lowe has backed the tax cuts to stimulate the economy, but is urging the states to fast-track infrastructure spending.
“The Australian economy is growing and the fundamentals are strong,” Dr Lowe said.
“The outlook is being supported by our lower interest rates, by your tax cuts, by higher levels of investment in infrastructure, by a pickup in the resources sector and the stabilisation of the housing market in Sydney and Melbourne.
“But I don’t think we should forget that more Australians have jobs today than ever before in Australian history. That’s a remarkable achievement.
“And I also agree with you that a priority is to make sure that Australia remains a great place for businesses to expand, innovate, invest and employ people and I’m sure we can do that.”
Mr Frydenberg again called on the banks to pass on interest rates cuts in full.