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Australians who earn under $126,000 face pay cuts as tax offset ends
The federal government will hand down the budget in less than three weeks, and is widely expected to extend a tax break known as the “lamington” – the low and middle income tax offset (LMITO).
The low- and middle-income tax offset (LMITO), which benefits people with a taxable income of between $48,000 and $90,000, is due to end in June. About 3.4 million people will be $1080 a year worse off and 7 million will take home less pay, according to analysis by the Bankwest Curtin Economics Research Centre, which was done for The Sydney Morning Herald and The Age. Without tax cuts for low- and middle-income earners, there’s a risk Australia’s economic recovery from the pandemic could slow, found the analysis.
The end of the tax cut is expected to disproportionately impact on women. The average woman is expected to pay $1506 in tax over the next three years, compared to $1156 for men, Rebecca Cassells and Alan Duncan from the Bankwest Curtin Economics Research Centre told The Sydney Morning Herald. “The withdrawal of the low- and middle-income tax offset from 2021-22 will disproportionately affect women, who will face an average increase in taxes paid of $502 per year from 2021-22 to 2023-24, relative to 2020-21,” they said. “For men, the average annual increase in taxes paid will be lower, at around $385 per year.” The researchers suggested the tax offset could be extended for three years at a cost of $21 billion.
Resource: 7 news