House of Representatives

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Josh Frydenberg MP)

General outline and financial impact

Personal Income Tax Relief

Schedule 1 to this Bill amends the income tax law to:

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increase the base and maximum amounts of the low and middle income tax offset to $255 and $1,080, respectively, for the 2018-19, 2019-20, 2020-21 and 2021-22 income years; and

•

increase the amount of the low income tax offset from 2022-23.

Schedule 2 to this Bill amends the income tax law to reduce the tax payable by individuals in 2022-23 and later income years by increasing income tax rate thresholds and in 2024-25 and later income years by lowering income tax rates.

Date of effect: The changes to the low and middle income tax offset apply in the 2018-19, 2019-20, 2020-21 and 2021-22 income years.

The changes to income tax thresholds, as well as to the low income tax offset, apply to the 2022-23 income year and later income years.

The changes to income tax rates apply to the 2024-25 income year and later income years.

Proposal announced: This Bill fully implements the measure 'Lower taxes for hard-working Australians: Building on the Personal Income Tax Plan' from the 2019-20 Budget.

Financial impact: As at the 2019-20 Budget, this measure is estimated to reduce revenue by $158 billion over the period from 2019-20 to 2029-30 and $19.5 billion over the forward estimates period, comprising:

Human rights implications: This Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 2, paragraphs 2.1 to 2.7.

Compliance cost impact: This measure is expected to only have a minor regulatory impact.