Global Daily Tax News, Australia Rethinking Stage 3 Income Tax Cuts, (Jan 25, 2024)

Reneging on an election promise, the Australian Government has indicated that it is considering watering down the so-called Stage 3 individual income tax reliefs.

Implementation of the previously legislated for tax cuts was a major policy pledge that helped secure the Labor Party a parliamentary majority on May 21, 2022. These plans are now to be reviewed, given the impact on lower-income households of current high rates of inflation.

Specifically, the Stage 3 tax cuts would rejig Australia's personal income tax bands, by installing two rates of 30 percent and 45 percent on income exceeding AUD45,000, rather than the current three.

Currently, income exceeding AUD45,000 is subject to a 32.5 percent rate up to AUD120,000; a 37 percent rate applies to income up to AUD180,000; and a 45 percent rate applies thereafter.

The Stage 3 tax cuts would provide considerable relief to wealthier taxpayers, with the 30-percent rate applying to income up to AUD200,000 and the 45-percent rate applying thereafter.