Since July 1, 2024, significant changes to Australia’s individual income tax rates and thresholds came into effect. These new tax cuts will impact all taxable income you earn. Discover how this could boost your financial well-being and what they mean for your future.

New Tax Rate Changes:

• Reducing the 19% tax rate to 16%
• Reducing the 32.5% tax rate to 30%
• Increasing the 37% tax threshold from $120,000 to $135,000
• Increasing the 45% tax threshold from $180,000 to $190,000

There are great benefits that will come from these tax cuts, especially for those looking to purchase property.

Improved Affordability for Home Buyers
By lowering the overall tax burden, these cuts can improve the affordability of housing for first home buyers, making it easier to enter the market. Lower taxes mean more disposable income, which can help accumulate savings quicker for a deposit, whether that’s for your first home or an investment property.

Enhanced Loan Approvals for Borrowers
Lower taxes mean borrowers have more funds available to comfortably meet their mortgage repayments. Lenders may be more willing to approve larger loans when borrowers can show sufficient income to cover repayments after accounting for other expenses such as liabilities or living expenses.

Real-Life Impact on Loan Amounts
To give some perspective, we recently had an application where the clients were looking to purchase their next home to live in. Previously, we could only service a loan amount of $340,000. After the tax cut announcement and updated servicing calculators, we are now able to service a loan amount of $395,000. That’s a $55,000 difference!

Job Creation
With more resources available due to tax cuts, businesses can choose to expand their workforce. This can lead to increased employment opportunities within the industry.

These changes mark a significant shift in Australia’s individual income tax landscape. By reducing tax rates and adjusting thresholds, these changes offer considerable benefits to taxpayers. Notably, they enhance housing affordability for first-time buyers and improve loan approval prospects for borrowers, as seen in real-life examples of increased loan amounts.

Stay informed about these tax updates to take full advantage of the benefits they offer for your financial growth.