21st Jun 2018, 11:41 AM – Senate Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 - Consideration of House of Representatives Message - Don't insist on amendments

The majority voted in favour of a motion:

That the committee does not insist on its amendments to which the House of Representatives has disagreed.

This motion was later agreed to by the Senate as a whole.

Note that a bill must be agreed to by both the House of Representatives and the Senate in order to become a law. In this case, the Senate had voted for a number of amendments that the House of Representatives didn't agree with. If the Senate had insisted on their amendments, the bill would have failed.

What does this bill do?

According to the bills digest:

The Government announced its Personal Income Tax Plan (PITP) in the 2018–19 Budget. The PITP reduces personal income taxes over the next seven years through a combination of changes to tax offsets for low and middle income earners and changes in income tax thresholds. The changes will be implemented over three steps, commencing in 2018–19, 2022–23 and 2024–25. The 2018–19 changes are targeted at low and medium income earners, with the changes in 2022–23 and 2024–25 applying to individuals on higher taxable incomes.

The Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 (the Bill) seeks to implement all components of the PITP. The PITP will be implemented in three steps, commencing in the 2018–19, 2022–23 and 2024–25 income years.

• Step one in 2018–19; introduces the new Low and Middle Income Tax Offset (LAMITO) – a non-refundable tax offset of up to $530 per annum for individuals earning up to $125,333:

• the LAMITO will only apply in the 2018–19, 2019–20, 2020–21 and 2021–22 income years

• from 2022–23 subsequent changes to income tax thresholds will ‘lock-in’ these tax reductions for these individuals

• the top income tax threshold for the 32.5 per cent tax rate will also be increased from $87,000 to $90,000 from 2018–19.

• Step two commencing in 2022–23; increases the maximum rate of the existing Low-Income Tax Offset (LITO) from $445 to $645 per annum. The top income threshold for the 32.5 per cent rate will be increased from $90,000 to $120,000 and the top income threshold for the 19 per cent marginal rate will increase from $37,000 to $41,000 and

• Step three commencing in 2024–25 will extend the 32.5 per cent tax rate up to taxable income of $200,000, abolishing the 37 per cent marginal tax rate entirely. The 45 per cent marginal tax rate will be retained, meaning income in excess of $200,000 will be taxed at 45 per cent, as is currently the case for income in excess of $180,000.