Tax time is always a stressful time. You don’t know how much you have earned as you have been working all year, paying your bills, and trying to have some spare time for yourself.
In Australia, in 2020–2021, almost one-third of big businesses did not pay any income taxes. There is no better time to learn about tax laws in Australia.
Learning about Australian taxes is complex but a crucial aspect of living in the country. What you need to understand is that the tax system is progressive.
As you earn more money, your tax bracket increases. This means that you pay a greater percentage of tax on your earnings.
So when are the new tax laws going into effect? How do you determine what tax bracket you fall under? Below you will learn about new tax laws in Australia.
1. Low & Middle Income Tax Offset (LMITO)
The Low and Middle-Income Tax Offset (LMITO) is a non-refundable offset that low and middle-income earners are eligible for when lodging their tax returns. This offset is a Government measure to help make sure tax brackets remain fair and equitable and to ensure that no one is over-taxed. Eligible taxpayers should make sure they claim this offset during their annual income tax return, and any unused amounts can be carried forward.
The exact amount offset varies depending on the taxpayer’s income and how much tax they have paid. To receive the offset, taxpayers must lodge their tax returns by the due date. LMITO should be taken into account when calculating a taxpayer’s effective tax rate to maximize the saving of any tax that is payable to the ATO.
2. Low or No Tax Rate for Australian Earners
The system is designed to provide relief to taxpayers with lower incomes, who will benefit from an increased tax-free threshold. Those on higher incomes are not exempt, but the tax burden faced is shifted to ensure a fairer system for higher-income earners.
Utilizing an experienced online accountant can keep you informed and help you make the most of your current finances. With the new tax laws, Australians can now better plan their finances with the assurance of a fair and equitable taxation system.
3. Deductions for Charitable Donations
The Australian Government has introduced new laws this year to encourage more individuals and businesses to give to charities. With charitable deductions, individuals and businesses in Australia can claim a tax deduction for donations. For donations of two dollars or more, individuals can claim a tax deduction in the income year they donated.
When donating, make sure that you get a receipt, as it is necessary to be able to claim a tax deduction. Gifts received for services such as volunteering or attending an event don’t qualify for a donation deduction.
While deductions for charitable donations can be claimed, it’s important to note that the amount claimed must be less than 10 percent of your taxable income for that year. This means that you cannot claim more than 10 percent of your total income in any given year.
Familiarizing New Tax Laws in Australia
New tax laws in Australia can be complicated and ever-changing. To stay up to date on Aussie tax laws, it is important to check the Australian Tax Office website for updates.
With careful planning and research, you can take advantage of them to save money and stay compliant with the law. For more information and support, seek professional tax advice from a reliable registered tax agent in Australia.
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