The Federal Budget has been released, broken down, analysed, criticised and applauded – but in the end, what you need to know is what it means to you as a contractor…
The good news is that the government will increase the maximum benefit of the low and middle-income tax offset (LMITO) from $530 to $1,080 for single income families and up to $2160 for dual income families. The base amount will also increase from $200 to $255.
This means if you’re a contractor earning up to $126,000 a year, when you submit your tax return any time after 1 July, you can expect to receive an offset of up to $1080 (or up to $2160 if you have a dual income family). The offset will apply to financial years 2018-2019 through to 2021-2022 income years. The threshold on which no income tax is paid remains the same, at A$18,200.
If you’re a contractor on a low income you can also expect to pocket a one-off energy assistance payment to help with bills. This is worth $75 for singles and $125 for couples.
The Liberal party has promised further tax relief after the 2022 and 2025 elections, subject to its success at the polls. In 2022-23 the point at which the marginal tax rate increases from 19% to 32.5% will lift from A$41,000 to A$45,000. In 2024-25 the marginal tax rate on incomes between A$45,000 and A$200,000 will be reduced to 30%. The top tax rate of 45% (which now kicks in at A$180,000) will apply to any income above A$200,000.
Only minor reforms were announced for superannuation. From July 2020, contractors and workers who are 65 or 66 will be allowed to make additional voluntary super contributions without having to meet work-test requirements. They will also be allowed to make three years’ worth of non-concessional contributions in a single year.
Access Your Offset
With 20 years of experience in contractor management, Ayers Group is able to help you manage your obligations as a contractor. Our convenient contractor portal makes it quick and easy to sign up new contracts and submit timesheets. Our customised payroll software ensures you’re paid on time, every time, reimbursable expenses are processed quickly, and your tax obligations are met.
As a contractor with Ayers, you’ll even benefit from free standard tax returns so you can access your offset quickly. Contact us today.
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