Australians are set to enjoy a boost in superannuation payments and a tax break worth up to $1080, while the corporate tax rate will fall for small and medium sized businesses as part of a raft of policies which come into effect on July 1.
Significant changes to the nation’s nest egg scheme will enter into force with the start of the 2021-22 financial year, beginning with a 0.5 per cent boost — increasing from 9.5 per cent to 10 per cent per annum — to Australian worker’s superannuation funds.
The mandated super contributions will increase employer supplements by half a per cent each year until it reaches 12 per cent in 2025. The rise, however, could come with a pay cut, with Superannuation Minister Jane Hume declaring she wouldn’t stop businesses from deducting the increases from employees’ wages.
The super earning threshold will also be scrapped, meaning employers will be required to contribute to all workers, even those who earn under $450 a month.
As part of the Low and Middle Income Tax Offset, Australians could receive a bumper addition to their bottom line. After the Morrison Government decided to bring forward the “stage 2” tax cuts, first flagged in the 2018 budget, the offset will be eligible for anyone earning up to $126,000.
Anyone earning up to $37,000 will have their tax cut by up to $255, and with the LMITO gradually increasing for taxable incomes between $48,000 and $90,000, workers could see their tax break reach $1080, before falling for those whose incomes exceed $90,000.
In a joint statement, Josh Frydenberg and Finance Minister Simon Birmingham said the policies would “set Australia up for the future”, with the tax cuts aimed at incentivising spending to support businesses taking on additional staff and investments.
Small-to-medium sized enterprises will also benefit from the new financial year, with the corporate tax rate falling from 26 per cent to 25 per cent. The progressive tax rate changes will apply to companies with a turnover of up to $50m. The full 30 per cent tax rate will apply to companies whose turnover exceeds that. The decrease in the base rate will also save on paperwork, with companies who met the threshold between 2017-18 to 2019-20 required to apply for the tax decrease.
Craft beer brewers will benefit from $255 million in tax relief, part of the remission of excise duty for the alcohol manufacturers’ scheme.