Live and work in the NSW Northern River Region? Want to know how much less tax you will pay under the Albanese Government 's changes to former Morrison Government Stage 3 tax cuts?

The Australian Government Treasury has kindly created a an online Tax Cut Calculator which those who pay personal income tax on their wages or salaries can use to calculate how much less in tax liabilities they will have in 2024-25. 

Calculation are based on an individual's annual taxable income and, starts showing varying degrees of tax relief at taxable incomes of $21,887 per annum all the way up to taxable incomes of $1,000,000 per annum.

It will also supply a comparison with this financial year's estimated annual tax liability and an individual's estimated annual tax liability in 2024-25 if the proposed amendments are passed by the House of Representatives this month.

Go to: https://treasury.gov.au/tax-cuts/calculator 

Why did the Albanese Labor Government make the decision to amend the former Morrison Coalition Government tax cuts due to come into effect on 1 July 2024?  

Treasury Advice on Stage 3 Tax Cuts

Overview

  The upcoming Stage 3 tax cuts were designed and legislated when dramatically different circumstances were expected to unfold. Since they were legislated, the global economy has been impacted by several significant, unanticipated shocks. The COVID-19 pandemic disrupted supply chains and saw the rollout of unprecedented government support. More recently, ongoing global conflicts have led to rapid increases in energy and food prices, which are rippling through domestic prices and have contributed to inflation reaching 30-year highs. 

  Low- and middle-income households have been under significant pressure from unanticipated cost-of-living increases associated with the lift in prices. It is challenging to provide support to these households without unduly adding to inflationary pressures and perpetuating cost-of-living challenges. 

  Treasury expects inflation to return to the target band over the coming 18 months and built into this profile are the Stage 3 tax cuts. One way to provide further relief to those households most affected by cost-of-living increases and not impact inflation is to redesign the Stage 3 tax cuts. 

  It remains important to deliver an overall tax cut around the size of the Stage 3 tax cuts to unwind bracket creep and lower average income tax rates. This case is supported by the ongoing improvement in the budget position and adverse impacts of rising average income tax rates. 

  A redesign of the Stage 3 tax cuts presents other opportunities, including enhancing the participation benefits of the tax cuts, especially for women, and distributing the future impact of bracket creep more evenly. This can be achieved with the same budgetary cost as the Stage 3 tax cuts. 

  The redesign of the Stage 3 tax cuts outlined in this document is estimated to provide cost-of-living relief to 13.6 million taxpayers. This option is broadly revenue neutral, will not add to inflationary pressures and will support labour supply......

Read the full advice at:

https://treasury.gov.au/sites/default/files/2024-01/tax-cuts-treasury-advice.pdf 

IMAGE: Australian Treasury

By way of example.....

Using the 2021 Census &.id informed decisions data as guidelines for Northern Rivers Region stated annual individual incomes and relying on figures produced by Treasury's tax calculator:

in the 2024-25 financial year an est. 8.7% of all Northern Rivers local workers should see an annual tax cut somewhere between $234-$513;

with roughly 23% of local workers expected to find their annual tax liability reduced by between $468-$700;

around 14.5% can expect to have their tax liability drop by somewhere between $700-$978;

another 14.5% of local workers have annual incomes which should see their tax cut come in between $978-$1,303;

an est. 9.5% of local workers are calculated to receive a tax cut of between $1,304-$1,629;

while 7.7% of all local workers are estimated to fall within the range of between $2,279-$ 3,729 less in annual tax liability; and

est. 3.7% of all workers may see their annual tax liability cut by between $3,729-$3,889 or higher.  

Note: this is not an exhaustive list of Northern Rivers local workers' expected tax cuts in 2024-05 should the House of Representatives pass the Albanese Government proposed amendments to the former Morrison Government Stage 3 tax cuts.

BACKGROUND

Northern Rivers Regional Area

IMAGE: .id informed decisions

At the 2021 Census est. 116, 851 people were working part-time or full-time for a wage or salary in the seven local government areas within the NSW Northern Rivers region. [.id informed decisions, Northern Rivers Region economic profile]

In 2021 the taxable gross income of these workers ranged from est. $351 up to $3,500 and over per week.

Overall, 15.4% of the local workers earned a high income, and 16.0% earned a low income, compared with 24.6% and 11.5% respectively for NSW.

The major differences between the weekly income of the local workers in the Northern Rivers Region and NSW were:

• A smaller percentage of local workers who earned $2,000 - $2,999 (7.7% compared to 13.3%)

• A smaller percentage of local workers who earned $3,500 or more (2.4% compared to 6.2%)

• A larger percentage of local workers who earned $800 - $999 (14.5% compared to 10.9%)

• A larger percentage of local workers who earned $650 - $799 (11.5% compared to 8.1%) [.id informed decisions, Northern Rivers Region economic profile]

A GST fraud wave costing Treasury at least $4.6 billion has been perpetrated by thousands of greedy people falsely asserting they own & trade as a business

 

Financial Review, 14 August 2023:

An explosive wave of fraud that has shaken the Tax Office’s GST system had been building for months before accountants began to notice early last year. By then it was everywhere and no one wanted to talk about it.

“I started seeing it through the office about March of 2022, a few people came in with business files with the ATO – these really large credits going out, big, big credits, unusual credits,” a western Sydney accountant told The Australian Financial Review.

“It didn’t prick my attention. Then I saw a few more, and a few more, and a few more. It kept growing. Tax time came [from July 2022] and it was rampant, absolutely rampant.”

By then, accountants around Australia were realising that the country was in the thick of a multibillion-dollar explosion of GST fraud that had gone viral. It’s the crime wave the Tax Office didn’t see coming.

How big a crime wave? “The inside word among tax officers is $4.6 billion – that is insane,” says the accountant, who like others spoke to the Financial Review on condition of anonymity. “Everyone’s too scared to go up against the ATO.”

The Tax Office has confirmed the $4.6 billion figure, which seems likely to be an underestimate.

It was “the biggest tax revenue fraud against the community in the history of the ATO”, deputy commissioner John Ford said in a speech in May.

The fraud is a simple one that involves individuals using their MyGov account to claim refunds on GST payments that were never made.

While the fraud may be simple, piecing together this invisible crime wave raises questions about why the Tax Office took so long to catch on.

And now it’s tax time again. While the Tax Office insists it has the fraud under control, accountants in western Sydney are painting a darker picture.

“They keep changing [the scam],” an accountant says. “I saw more clients today that [the ATO] didn’t pick up. One guy got $50,000, then another $35,000, then another $25,000.

“He hasn’t had to pay it back. He got this at the end of 2022. This isn’t being picked up as fraudulent activity.

“I’ve seen two more already this morning. One has a debt of $18,000. He tried to get more but was stopped eventually by the ATO.”

A client received $130,000 from fraudulent claims in July 2022 and was not picked up until December. Another client was paid $60,000 last September. How did it get to this?

Banks had been warning the Tax Office about a rising pattern of GST fraud – and freezing suspect accounts – from late 2020. They became increasingly frustrated by the apparent lack of action by the ATO, as they were faced with the decision of what to do with the frozen accounts…..

By mid-2021 the fraud was exploding as social media – in particular TikTok – was full of explainers how to get a “loan” from the government.

In one example cited to the Financial Review a man claimed a $50,000 GST refund in August 2021, then raised another $50,000 several months later. It was only when he tried it again last May that the Tax Office caught up with him.

Read the full article here.