House of Representatives

Explanatory Memorandum

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

Chapter 2 - Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

Treasury Laws Amendment (Tax Relief So Working Australians Keep More of Their Money) Bill 2019

2.1 This Bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview

2.2 Schedule 1 to this Bill amends the ITAA 1997 to:

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increase the base and maximum amounts of the low and middle income tax offset for the 2018-19, 2019-20, 2020-2021 and 2021-22 income years to $255 (from $200) and $1,080 (from $530), respectively, and make related changes to taper rates and thresholds; and

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change the base amount, taxable income thresholds and taper rates for the new low income tax offset for 2022-23 and later income years, ensuring all taxpayers remain better off following the cessation of the low and middle income tax offset in 2022-23.

2.3 Schedule 2 to this Bill amends the Income Tax Rates Act 1986 to:

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for the 2022-23 income year and later income years, increase the amount of taxable income subject to the first personal rate of income tax of 19 per cent to include an individual's taxable income between $18,201 and $45,000 (rather than $41,000).

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for the 2024-25 income year and later income years, reduce the second personal rate of income tax to 30 per cent (from 32.5 per cent); and

2.4 Schedule 2 also makes equivalent changes for other entities that are taxed like individuals as well as to the rates and thresholds that apply to foreign residents and working holiday-makers.

2.5 Together these amendments reduce the income tax burden faced by taxpaying individuals.

Human rights implications

2.6 This Bill does not engage any of the applicable rights or freedoms. While the provisions relating to the low and middle income tax offset apply retrospectively, they do so in a way that is wholly beneficial for affected entities.

Conclusion

2.7 This Bill is compatible with human rights as it does not raise any human rights issues.