Impact of the removal of the low-middle income tax offset

By Rebecca Cassells & Alan Duncan (Bankwest Curtin Economics Centre)

Our assessment of the combined personal tax, rebate and JobSeeker reforms include combined and separate impacts of the following changes to the tax-transfer system over the 2020-21 and 2021-22 financial years relative to a base year (2019-20). These include:

  • Bringing forward Stage 2 of the Personal Tax Plan to 2020-21, which includes:
    • Changes to income tax brackets: raising the thresholds of the 19%, 32.5% and 37% tax brackets
    • Increasing the Low Income Tax Offset (LITO) from $445 to $700 (up $255) coupled with changes to the thresholds and withdrawal tapers
    • Removal of the $1,080 Low and Medium Income Tax Offset (LMITO) from 2021-22
  • Reduction of the JobSeeker COVID-19 supplement in September 2020
  • Withdrawal of the JobSeeker COVID-19 supplement in December 2020

This brief provides analysis of changes in taxable income in 2019-20, 2020-21 and 2021-22. Analysis with and without JobSeeker is provided.

Download the brief

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