With the recent news that Australia has officially fallen into a recession after two decades of profitable growth and the new announcements of tax cuts, accounting advice is more important now than ever.
Speaking with the ABC, Treasurer Josh Frydenberg has announced proposed personal tax cuts being brought forward in the vicinity of $158 billion for Australians.
While the cuts were scheduled for mid-2022, they have been brought forward to ease the growing financial tension on Australians and help to encourage more spending into the local economy.
The third stage cuts with a tax rate of 32.5 per cent to the vast majority of workers were expected to be applied from 2024. Mr Frydenberg firstly revealed these would be brought forward to 2022 and now even quicker, with news it could now be carried forward to this financial year.
What are the savings for your income bracket?
The significant savings kick in for those earning between $50,000 and $90,000, who will have their total annual tax reduced by $1080.
Those with a taxable income between $90,000 and $100,000 will be reduced by $1215 and those earning between $100,000 and $120,000 save $1665.
The additional boost is hoped to aggregate demand and stimulate people’s confidence to increase consumption and spending into the economy.
Ways to protect yourself in a recession
1. Pay down your debt
2. Establish an emergency fund
Everyone should aim to have an emergency fund that can cover around 3-6 months of expenses in case of job losses. Even if you believe your job is safe, this amount in your account will help build your future when times get tough or when unexpected accidents or injuries occur.
3. Forget about large ticket items
4. Set a sensible weekly budget
5. Evaluate your investments
Anthony McPhee, Principal
B.Bus (Accy) QUT | FCPA, SSA (SMSF Specialist Advisor with the SMSF Association) & Registered Tax Agent
Anthony has over 25 years accountancy, taxation and superannuation (SMSF) experience. He eagerly welcomes a challenge and his passion is in small business accounting, superannuation, consulting and taxation advice. He provides real business benefits for each of his clients and is well regarded for his succinct and accurate accounting skills. Anthony is also a self-managed superannuation fund (SMSF) specialist with Australia’s leading SMSF body, The SMSF Association.