 Those with simpler tax affairs will get tax refunds
The Australian government has slashed $840 million from the popular superannuation co-contribution to help pay the costs. On the other hand, the government will increase super benefits though savings tax breaks. Some concessions are also made to first home saver accounts which will give the first home buyers a greater chance to save more.
The savings tax break will give 50 % discount on the first $1000 of interest income earned annually. Therefore a tax payer who is on the 31.5 % tax rate margin will pay $158 on $1000 interest instead of $310.
The discount pertains to bonds, debentures, annuities and deposit products. It will be available regardless if one owns the investment directly or through a managed fund.
Meanwhile, the proposed reduced tax deduction is expected to benefit an estimated 4.6 million Australians. This will lower their taxes by $500 for work-related expenses, without having to substantiate the expenses.
Both the savings discount and the reduced taxes will result in increased tax savings for the low-income earners.
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