Confirming recent speculation, Australian Treasurer Peter Costello announced A$14.7 billion worth of income tax cuts in the government's budget delivered on Tuesday, mainly through the raising of income tax thresholds and greater tax benefits for families.
“People on middle incomes should not face the top rate of income tax,” declared Mr Costello, explaining that tax thresholds are to be increased in two stages.
From 1 July 2004, the 42% threshold will be increased from $52,000 to $58,000, and the 47% threshold will be increased from $62,500 to $70,000.
These brackets will then be shifted upwards again from 1 July 2005, when the 42% threshold will be further increased to $63,000 and the 47% threshold raised to $80,000.
According to Costello, these reforms will ensure that more than 80% of Australian taxpayers will face a top rate of tax no higher than 30% over the coming years, whilst those currently paying the top rate of income tax will receive a tax cut of $42.21 per week.
“These changes improve the structure of Australia’s income tax system. They make it more internationally competitive. They improve incentive,” he observed.
The Treasurer also announced further measures aimed at reducing the compliance burden for small businesses, by allowing firms currently below the registration threshold and voluntarily registered for GST to report and pay GST annually, instead of quarterly.
These measures will benefit around 740,000 small businesses and 30,000 non-profit organisations that are voluntarily registered and currently pay on a monthly or quarterly basis.
The full text of the 2004-05 Australian Budget can be found in the Tax-News Resources section.
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