The third round of the Federal Government’s tax cuts come into operation today, July 1.

Member for Richmond Justine Elliot said that for a North Coast resident earning $50,000 a year, the tax cuts will mean an extra $450 in the pocket each year.

“On top of three income tax cuts in three years, families have received stimulus payments, a major boost to the aged pension and a historic paid parental scheme,” she said.

This was also in addition to further cost-of-living relief delivered through the Childcare Tax Rebate and the Education Tax Refund.

Compared with their income tax liability for 2007-08 (and excluding the Medicare levy), by 2010-11:

  • A person earning $20,000 will have received an income tax cut of around 56 per cent
  • A person earning $50,000 will have received an income tax cut of around 18 per cent
  • A person earning $80,000 will have received an income tax cut of around 8 per cent.

Also from 1 July 2010 the Low Income Tax Offset will increase for the third time in a row, from $1350 to $1500.

This means the effective tax-free threshold for taxpayers eligible for the full low-income tax offset will increase from $15,000 to $16,000.

Mrs Elliot said lifting the effective tax-free threshold for low-income workers will continue to provide more incentive to participate in the workforce, particularly for part-time and older workers.

Tax cuts will include lifting the 30 per cent marginal tax rate threshold from $35,001 to $37,001 and decreasing the 38 per cent marginal tax rate to 37 per cent.

The amount of income a senior Australian eligible for the Senior Australian Tax Offset can earn before they incur an income tax liability will increase from $28,867 to $29,867 for singles, and from $24,680 to $25,680 for each member of a couple.

Mrs Elliot said that all of these measures are part of the Government’s plan to strengthen Australia’s economy so it delivers for families.