The Elusive $1,500: A tax offset, not a cash handout!
The 2022-23 Australian Federal Budget has its goodies and baddies. That “$1,500” is surely one of the good guys. For many of us, it is $1,500 in our pockets come tax time. It should buy us at least 750 litres of unleaded 91 if nothing else.
This superhero has effectively made up to $24,700 of income tax-free! When you see your accountant for the May/June tax planning make sure you discuss this.
Consider this example for a couple earning $144k with a roughly 50/50 split. Between them, they will get $3,000 off their tax and in their bank accounts. That split can be as skewed as 60/40 and that $3,000 will still make its way to the couple’s bank account. Happy days!
However, this $1,500 will not get to everyone nor will it get to you when you want it to. To get it you need to lodge your 2022 individual tax return. This means you are at least 3 months away, assuming your accountant will lodge the return within the first week of July (as you are his/her favourite!). Then there will be at least a couple of weeks' wait time for the ATO to process your refund. So, the earliest you can get that $1,500 is in late July – 4 months away. So, plan your cash flow accordingly.
I am sure all the accountants, including myself, are gearing up so that they can lodge as many returns as possible as quickly as they can.
Now the 1,500-dollar-question: Will everyone get it? The rude answer is No (unless your taxable income is between $48k and $90k).
The more polite answer is – that depending on your income level you may not get the full $1,500. For example, if your taxable income is up to $37k the maximum you can expect is $675. If you are within $37k and $48k your rebate will vary between $675 and $1,500. When your taxable income exceeds $90k, that $1,500 starts to taper off and then vanishes at $126k. If you are earning more than $90k you probably do not care, I guess.
Fulltime Student-Part Time/Casual Worker can have their hearts broken if they are expecting $675 or even worse - the $1,500. No offence to this workforce cohort, but I am assuming as a full-time Student-Part Time/Casual Worker you are not earning any more than $18k a year. If that is the case, you will fall below the stipulated tax-free threshold i.e., no tax obligation! While that sounds very cool it also ensures that you are not getting any of that $675. This will happen because this $675 (or $1,500) can only be used to reduce your tax. If there is no tax to pay, then you will not get it as it is not a cash handout.
The above will hold true for anyone who earns less than $18,200. Now contrast my earlier example with a couple where one earns $126k and the other earns $18k, making a combined family income of $144k. Unfortunately, neither of them will get any of that $1,500. Ouch, unless there are some changes.
At Bachmayer Accounting we endeavour to share such commentaries to improve tax and financial awareness. We can be reached on either 07 3389 4555 or email@example.com. You can also visit us at www.bachmayeraccoutning.com.au.