Tax Cuts Australia: How will the new Stage 3 Tax affect you?

There has been a lot of talk in recent times about the Stage 3 tax cuts in Australia. Will they still go ahead and what will it mean for you?

The Labor Government is saying they haven’t changed their stance regarding these tax cuts and they will go ahead starting from July 2024. This will affect everyone earning over $45,000.

One of the main changes includes a new income tax bracket for high-income earners.

This article will explain how these changes will affect you and your family and how you can financially prepare ahead.

Watch the video here:

DISCLAIMER – The information provided in this blog is general and does not consider your individual financial needs or objectives. It does not constitute personal advice. We recommend seeking out professional and independent financial, legal and tax advice which has been designed for your individual situation before acting on any information contained below.

Current Income tax rates Australia Currently, earnings for Australian residents are taxed according to the following table (Source: Australian Tax Office).

Tax Cuts Australia: New Tax Rates

Once the new tax cut’s come into place, it means everyone earning between $45,001 – $200,000 will be on the same 30% rate of Tax.

This is great news for the majority of Australians as it means paying less income tax. Less income tax means more money in our pockets and more money to put towards other things.

Tax Deductions in Australia: What does it mean for you?

While this is a good thing because it means more money in our pockets, it also means that some of the strategies available to you now to minimise tax may be reduced after July 2024.

This includes:

• Concessional contributions to Super
• Salary sacrifice contributions
• Concessional catch-up contributions

This means it may work out better for you to maximise your deductions now using the available superannuation contribution rules and also potentially delaying incurring capital gains tax on investment sales until after July 2024.

Tax Deductions in Australia: Our Advice

Because these benefits will effectively be reduced, from July 2024, now is a really good time to look at your strategy and think about what changes you would like to make.

You may also want to consider what things you want to take advantage of now, while these greater tax savings are still available to you now.

Tax Cuts Australia: How will the new Stage 3 Tax affect you? 

It is important to understand how the changes will affect you and your family so that you can make the best decisions for your financial future.

If you have any questions about this or you’d like to chat about how to maximise your finances before the stage 3 tax cuts come into effect in July 2024, contact Precision Wealth Management today!