Eight million workers had an extra $760 in their pocket over the last six months thanks to tax cuts kicking in as part of a plan to encourage spending during the coronavirus pandemic.
New data compiled by the Australian Taxation Office, shows a total of $5.9 billion flowed back to 7.8 million earners nationally through the low- and middle-income tax offset in the six months to January. The offset, also known as the “lamington”, gives these income earners up to $1080 back in their pay over the year.
Households further benefited from $1.1 billion in tax savings over this period due to the stage two tax cuts being brought forward in the federal budget. These changes lifted the top threshold of the 19 per cent tax bracket to $45,000 from $37,000 and increased the 32.5 per cent tax bracket’s top threshold to $120,000 from $90,000.
The 2020-21 federal budget fast-tracked the stage two tax cuts to put money back into the economy as activity dropped during the pandemic due to restrictions, uncertainty and hardship. About 11.6 million people were expected to get a tax cut in 2020-21. Forecasts made in the budget documents at the time said the cuts would boost GDP by $3.5 billion this financial year and $9 billion in 2021-2022.
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