21st Jun 2018, 10:14 AM – Representatives Treasury Laws Amendment (Personal Income Tax Plan) Bill 2018 - Consideration of Senate Message - Adopt reasons

The majority voted in favour of a motion "that the reasons be adopted."

The reasons voted on in this division were the reasons why they disagreed with the Senate's amendments to the bill. In other words, the House was rejecting the Senate's amendments for the reasons set out below.

What were the reasons?

Reasons of the House of Representatives for disagreeing to the amendments of the Senate

Senate Amendments (1, 2 and 3)

The amendments proposed by the Senate remove step three of the Personal Income Tax Plan. Step three of the Personal Income Tax Plan simplifies and flattens the tax system by abolishing the 37 per cent tax bracket entirely, reducing the number of tax brackets from five to four.

The Plan is a package that gives certainty to Australian families that they will keep more of what they earn in the future. It comprises three steps.

Step 1, prioritises low and middle income earners by providing tax relief of up to $530 to help with cost of living pressures.

Step 2, protects what Australians earn from bracket creep, ensuring that a pay rise, extra overtime or working more hours do not get eaten up by higher tax rates.

Step 3, by simplifying and flattening the tax system, ensures that, by 2024-25, some 94 per cent of taxpayers will face a marginal tax rate no higher than 32.5 per cent based on projections.

High income earners will continue to pay their fair share with the tax system remaining progressive under the Personal Income Tax Plan. For example, a person on $200,000 would pay around 13 times more tax than a person on $41,000.

In 2015-16, the top 20 per cent of taxpayers paid around 61 per cent of all personal income tax. Under the Personal Income Tax Plan, this cohort is projected to continue to contribute a broadly similar share in 2024-25.

In 2015-16 those on the top tax bracket paid 30.3 per cent of all personal income tax collected. Under the plan those on the top tax bracket will pay around 36 per cent of all personal income tax collected in 2024-25.

The Personal Income Tax Plan delivers lower, fairer and simpler taxes to all taxpayers.

Accordingly, the House of Representatives does not accept these amendments.

What is this bill about?

The bill was introduced to:

• introduce a low and middle income tax offset to reduce the tax payable by low and middle income earners that are Australian residents in the 2018-19, 2019-20, 2020-21 and 2021-22 financial years;
• merge the low and middle income offset and the current low income tax offset into a new low income tax offset from the 2022-23 financial year; and
• progressively increase the income tax rate thresholds in the 2018-19, 2022-23 and 2024-25 financial years.