Stage 3 Tax Cuts

April 24, 2024

Matt Richardson

How does this affect you?

From 1 July 2024, the Stage 3 tax cuts will come into force for all Australian individual taxpayers. This will result in savings for all taxpayers with incomes above $18,200.

What are the changes?

• The 19% tax rate has been reduced to 16% for incomes between $18,200 and $45,000.
• The 32.5% tax rate has been reduced to 30% for incomes between $45,000 and the new $135,000 threshold.
• The threshold where the 37% tax rate applies has been increased from $120,000 to $135,000.
• The threshold where the top rate of 45% applies has been increased from $180,000 to $190,000.

The annual savings will be $1,679 for a taxable income of $80,000, $2,679 for a taxable income of $100,000 and $3,729 for a taxable income of $140,000.

Are there planning opportunities?

With income now being taxed lower from 1 July 2024, what should you be doing?

Bringing deductions forward

This will result in a lower tax bill in 2024 and a higher taxable income next year but taxed at a lower rate. Some opportunities include:

• Gifts and donations.
• Rental property expenditure – if you have been delaying repair work can you bring this into the 2024 year?
• Superannuation contributions.
• Prepayments of deductible expenses.

Deferring income

Opportunities include:

• Arrange for Term Deposits to mature from 1 July 2024 onwards, interest recorded in 2025 year.
• Trigger capital gains from 1 July 2024 (eg selling shares).

There is not a lot of time left to maximise the opportunity from the change in tax rates. For more information on how you can make this work for you, contact your accountant at Green Taylor Partners.