How your coming tax cut could pay off
Over the coming weeks, around 12 million working Australians will start receiving extra cash in their pay packets as a result of changes to personal income tax brackets announced by the federal government.
Tax relief by taxable income, 2020-21 compared with 2017-18 2017-18 2020-21
2017-18 | 2020-21 | |||
Taxable income $ | Tax liability $ | Tax liability $ | Change in tax $ | Change in tax % |
40,000 | 4,947 | 3,887 | -1,060 | -21.4 |
60,000 | 12,147 | 9,987 | -2,160 | -17.8 |
80,000 | 19,147 | 16,987 | -2,160 | -11.3 |
100,000 | 26,632 | 24,187 | -2,445 | -9.2 |
120,000 | 34,432 | 31,687 | -2,745 | -8.0 |
140,000 | 42,232 | 39,667 | -2,565 | -6.1 |
160,000 | 50,032 | 47,467 | -2,565 | -5.1 |
180,000 | 57,832 | 55,267 | -2,565 | -4.4 |
200,000 | 67,232 | 64,667 | -2,565 | -3.8 |
Source: Commonwealth Government. Actual outcomes for individuals and households may differ.
A tax cut compounding strategy
Using the tax savings to achieve compound growth
Extra cash per year | Extra cash per week (rounded) | Total deposits | Total interest earned | Total savings |
$1,060 | $20 | $10,400 | $11,554 | $26,954 |
$2,160 | $42 | $21,840 | $17,554 | $44,394 |
$2,445 | $47 | $24,440 | $18,918 | $48,358 |
$2,565 | $49 | $25,480 | $19,464 | $49,944 |
$2,745 | $53 | $27,560 | $20,555 | $53,115 |
Source: Vanguard.
A superannuation angle
Senior Personal Finance Writer
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