Federal Budget: All you need to know about the tax relief

Last Friday, the Morrison Government announced that it will be providing tax relief for Australians, creating more jobs to rebuild the economy and helping businesses stay afloat during these unprecedented times. 

COVID-19 has seen many Australians experience financial loss, either through termination or redundancy. This tax relief will provide an opportunity for Australians to have extra income to pay for their bills, boost their savings or make an investment towards their education. 

This tax relief package aims to reduce the personal income tax burden and further encourages investment towards businesses. It's been mentioned that this will help create around 100,000 jobs by the end of 2021-22 and predicts a boost in Gross Domestic Product (GDP) of $6 billion in 2021-21 and $19 billion in 2021-22.  

What the tax cut means for you

It's anticipated that more than 11 million Australians will be receiving a tax cut. 

You could receive a one-off additional benefit of up to $1,080 if you identify as a low-and middle-income earner in 2020-21. Below is a table inspired by the latest infographic posted by 9 News outlining how much tax money you'll be relieved from as part of the Morrison government's Stage Two Personal Income Tax plan. 
 

If you earn...	Tax relief
$37,000 or less	Up to $510
$37,001 - $48,000	$510 - $2,160
$48,001 - $90,000	$2,160 - $2,295
$90,001 - $126,000	$2,295 - $2,745

How will this 'tax relief' work?

In summary, 'tax relief' means that you'll be taxed less for each take-home pay. If you currently work for an employer, the tax taken from your pay will be reduced. This will also apply to those who are self-employed where the amount of tax needed to be paid will be reduced under the pay-as-you-go systems. 

This tax relief package will take into effect from 1st of July this year. 

The government will be taxing us less, which means that we'll have more money in the bank. This package was implemented to help boost the economy, encouraging Australians to spend more and keep businesses operating. 

How to spend your extra cash wisely

This tax cut will inevitably provide some financial relief to Australians. As COVID-19 is still in its existence, it's important to think ahead and keep your balances in check.

Below are some suggestions on how you can spend your extra coin wisely instead of blowing it out on a shopping spree or your next takeaway order.

1. Invest in your education.

One of the best ways to make your money work for you is to invest in your future and that all comes down to taking the opportunity to upskill. You may have been thinking about changing careers or wanting to develop your skillset even further. 

Through Upskilled, you have a wide range of courses to choose from in business, community services and IT. With fortnightly or monthly payment plans available, you can put that extra cash towards online training, helping "future-proof" your skillset.

2. Pay off extra debt.

If you have an existing car loan or credit card debt, it may be a smart idea to put that extra money and pay off existing loans. Provided that you have an existing emergency fund in place, putting your additional funds can help pay off your debt even faster, putting you one step closer to financial freedom. Imagine having more disposable income to play with - by paying off your debt faster, you also pay less interest. 

3. Save for your next holiday.

While international borders remain close, it doesn't mean you should neglect taking time off from work and do a bit of backyard exploring. It's easy to get caught up with work and not think about your holiday but what fun would that be if you didn't take a break once in a while? Putting money towards your travel fund will not only have you look forward to planning your next holiday, it also contributes to your long-term happiness and wellbeing. 

4. Give your emergency fund a boost. 

This year has been a big reality check for Australians with job losses and redundancies happening across industries like retail, hospitality or tourism. Having an emergency fund is one of the most useful accounts you can ever have. 

Even though it may remain untouched, it's important to consider something your future self may need. It's hard to predict what will happen in the next few months so feeling prepared for unforeseeable events is where an emergency fund can come in handy.

Put money towards your future career path

Whether you're looking to make a career switch or want to strengthen your skillset, Upskilled offers a variety of online courses that can help you upskill and work towards the career you love. If you have a keen interest in studying a qualification in business, community services or IT, enquire with one of Upskilled's education consultants by calling 1300 009 924. 
 

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