Treasury Laws Amendment (Tax Relief So Working Australians Keep More Of Their Money) Act 2019

Overview

The Treasury Laws Amendment (Tax Relief So Working Australians Keep More Of Their Money) Act 2019 was enacted by the Parliament of Australia to amend the law relating to taxation with a focus on providing tax relief to working Australians, ensuring they keep more of their money. The Act aims to provide relief by modifying the Low and Middle Income tax offset and the Low Income tax offset, as well as reforming personal income tax rates. It came into effect on 6 July 2019, the day after receiving Royal Assent. The policy objective of this Act is to alleviate the tax burden on lower and middle-income earners by adjusting the thresholds and rates at which certain tax offsets are applied and by modifying the personal income tax rates for various income brackets. This Act makes specific amendments to the Income Tax Assessment Act 1997 and the Income Tax Rates Act 1986. In the Income Tax Assessment Act 1997, it adjusts the thresholds for the Low and Middle Income tax offset and the Low Income tax offset, ensuring these offsets are more accessible and beneficial to those earning within the specified income brackets. Additionally, the Act modifies the income tax rates for resident taxpayers and working holiday makers in the Income Tax Rates Act 1986, setting new rates for different income thresholds to provide tax relief. These amendments apply to assessments for the 2018-19 to 2021-22 income years and to the 2022-23 to 2023-24 income years, with further adjustments scheduled for the 2024-25 income year and beyond.

Scope and Application

The Treasury Laws Amendment (Tax Relief So Working Australians Keep More Of Their Money) Act 2019 amends the law relating to taxation with the objective of providing tax relief to working Australians so they can retain more of their earnings. The Act applies to individuals and entities with incomes within specific brackets and is designed to benefit low and middle-income earners by adjusting tax offsets and rates. It applies nationally across Australia as a Commonwealth Act. The amendments to the Income Tax Assessment Act 1997 and the Income Tax Rates Act 1986 adjust tax thresholds and rates, particularly impacting assessments for the 2018-19 to 2021-22 income years. Certain tax rates for resident taxpayers and working holiday makers are also modified for the 2022-23 to 2023-24 income years and beyond, with some rates scheduled to be repealed on 1 July 2026. The Act does not specify any exclusions, exemptions, or thresholds beyond those outlined in the schedules, and its application is not extended or restricted by subordinate instruments.

Key Provisions

The Treasury Laws Amendment (Tax Relief So Working Australians Keep More Of Their Money) Act 2019 (C2019A00052) primarily amends the Income Tax Assessment Act 1997 and the Income Tax Rates Act 1986. Section 1 of the Act provides for the short title, and Section 2 details the commencement of the Act, which is the day after receiving Royal Assent. The key amendments are outlined in Schedule 1 and Schedule 2, focusing on the Low and Middle Income tax offset, Low Income tax offset, and personal income tax reform. Schedule 1 of the Act makes several changes to the Income Tax Assessment Act 1997. Paragraph 61-105(1)(b) and (2)(c) updates the income threshold for the Low and Middle Income tax offset from $125,333 to $126,000. Subsection 61-107(1) replaces the existing table detailing the amount of the tax offset with a new one, which now includes higher offsets for lower income brackets and a reduced offset for higher incomes. Similarly, subsection 61-115(1) replaces the table for the Low Income tax offset with a new one, adjusting the amounts and the income brackets. These amendments apply to assessments for the 2018-19, 2019-20, 2020-21, and 2021-22 income years. Schedule 2 amends the Income Tax Rates Act 1986 by updating the tax rates for resident taxpayers and working holiday makers for the 2022-23, 2023-24, and 2024-25 years of income. The new tax rates for resident taxpayers introduce a lower rate of 19% for incomes up to $45,000, and a higher rate of 32.5% for incomes between $45,000 and $120,000. For working holiday makers, the rates are set at 15% for incomes up to $45,000 and 32.5% for incomes between $45,000 and $120,000. Additionally, for the 2024-25 year of income and later, the tax rates for resident taxpayers increase to 30% for incomes between $45,000 and $200,000, and the rates for working holiday makers increase to 30% for incomes between $45,000 and $200,000. Entities and individuals governed by these Acts must adhere to the updated tax offset amounts and tax rates as specified in the amended sections. They must ensure their tax returns for the applicable income years reflect these changes to avoid discrepancies. Failure to comply with the new tax rates and offset amounts could lead to penalties or interest on any underpaid tax. The Act does not explicitly detail offences, penalties, or specific consequences for breach within its text. However, general tax law principles suggest that any underpayment of tax due to non-compliance with the new provisions could result in penalties and interest. The maximum penalties would depend on the degree of non-compliance and the period of underpayment, as per the applicable tax laws. It is crucial for taxpayers to ensure they are correctly applying the new tax rates and offsets to avoid any potential penalties or interest charges.