With the new financial year just days away, it’s imperative that you’ve got an understanding of what the new tax legislation looks like – namely the Stage Three tax cuts.
Treasurer Dr Jim Chalmers outlined exactly how these new tax reforms will play out in the new federal budget, but in case you missed it, the main takeaway here is that you’ll have a significantly reduced tax burden from 1 July 2024 if you’re a lower to middle class taxpayer.
The 2024-2025 Tax Rates
As touched on, you’ll benefit the most from this if you’re already in the lower tax brackets, as it’s always the higher earners who will have higher tax burdens:
- 19% tax rate reduced to 16
- 32.5% tax rate reduced to 30
- 37% tax threshold increased by $15k from $120,000 to $135,000
- 45% tax threshold increased by $10k from $180,000 to $190,000
As for the bottom two there, this means your tax burdens reduce even further as you’ll likely enter a new, more affordable, tax rate.
Why Should I Care About These Tax Cuts?
Firstly, the main benefit here is that you’re going to find an increase in your take-home pay – whether you plan on reinvesting money into your business or just improving your own financial situation, you’ll be able to keep more of the money you’ve worked for with these lower tax rates.
Aside from that, business owners can use these tax cuts as a means of having more disposable income – from hiring new staff and expanding your business operations to investing in new technologies in general.
How Can I Make The Most Out of My Tax Cuts?
Before anything else, we’d recommend keeping your payroll system, whether you use a bookkeeping software or a physical method, to reflect these new changes – this also involves speaking to your financial team so they’re aware of the new rates and not paying your employees an outdated amount of money.
The good news in general with this is that your business is going to have a lot more cash to spend, so this is a solid time to revisit your budget and business plans and work out how you want to use the extra funds.
With all this in mind, it’s not easy to understand the full impact these tax cuts are going to have on your business, so make sure you’re working with our team of chartered accountants and bookkeeping experts at AdvisoryOne to learn how you can best utilise your newfound funds! Get in touch today by calling 02 6324 5888
Recent Comments