Australian Tax Cuts Kick In: What You Need to Know
Australian taxpayers are set to receive a welcome boost to their bank accounts as long-awaited tax cuts come into effect. The average full-time worker earning around $98,220 can expect to see an extra $41 a week, totaling $2134 a year.
However, with rising living expenses such as mortgage repayments and rents, many Australians are planning to use the extra money for essentials like groceries. Some are considering supporting family overseas, while others were unaware of the tax cuts altogether.
Despite the tax cuts, the possibility of an interest rate hike looms, which could offset the benefits for many households. If rates were to rise by 25 basis points in August, a borrower with a $750,000 loan would need to pay an extra $123 a month.
Economic experts warn that the tax cuts may not provide much relief for borrowers facing existing financial pressures. With many households already struggling to keep up with rising costs, the extra cash may simply help them catch up or cope with potential interest rate increases.
The reworked tax cuts, which were controversially changed by Labor earlier this year, have sparked speculation about their impact on inflation. However, most Australians are planning to save or pay down debt rather than spend the extra money, which could help mitigate inflationary pressures.
Treasurer Jim Chalmers reassured the public that the tax cuts were designed to put downward pressure on prices, not fuel inflation. To make the most of the tax cuts, experts recommend paying down debt and setting up automatic payments to save or invest the extra money wisely.
