All Australian taxpayers will receive a tax cut when the 2024/25 financial year commences on July 1. This means that there is an opportunity to save tax in the 2023/24 financial year by doing one or all of the following strategies:
- Bring any 2024/25 financial year deductions forward if possible, so that they can be claimed in the current financial year. This strategy will reduce the amount of tax you pay at the current higher rates. There are a number of expenses this can relate to, for example, pre-payment of interest on loans.
- Delay income that is due to be received before June 30, so that it is received after July 1 instead, when the tax cuts will be in effect. There are several ways that you can delay income, for example, you could delay selling shares. This strategy will potentially allow this income to be taxed at a lower rate.
- If you have an unused concessional contribution cap amount from the 2018/2019 financial year, it will need to be claimed before June 30 to utilise the ‘carry forward’ provision of superannuation legislation.
- Concessional contributions are taxed at the concessional super tax rate of 15%, rather than higher marginal income tax rates. Concessional contributions are pre-tax and include employer contributions made on your behalf (for example, the compulsory super guarantee and any salary sacrifice arrangements), as well as voluntary personal contributions claimed as tax deductions.
- Please note you must have a total superannuation balance of less than $500,000 @ 30 June 2023 in order to utilise this opportunity.
The new marginal tax rates from 2024/25 and examples of the reduced tax payable at different income levels are provided below.
New marginal tax rates
The new marginal tax rates from July 1 are summarised in the table below.
| Taxable income bracket | Marginal tax rate |
| Less than $18,200 | 0 |
| $18,201 to $45,000 | 16% |
| $45,001 to $120,000 | 30% |
| $120,001 to $180,000 | 37% |
| Over $180,000 | 45% |
Impact of new marginal tax rates
Examples of the impact of the new marginal tax rates in terms of annual dollar tax cuts are provided in the table below.
| Annual taxable income | Annual tax cut |
| $45,000 | $804 |
| $75,000 | $1,554 |
| $100,000 | $2,179 |
| $150,000 | $3,729 |
According to Treasury forecasts, the average tax cut for all Australian taxpayers for the 2024/25 financial year will be $1,888. The average Australian taxpayer earns $73,000 per year.
Comparison of new and existing marginal tax rates
The tables below compare the new and existing tax rates.
| Taxable income bracket | 2024/25 Marginal tax rate |
| Less than $18,200 | 0 |
| $18,201 to $45,000 | 16% |
| $45,001 to $135,000 | 30% |
| $135,001 to $190,000 | 37% |
| Over $190,000 | 45% |
| Taxable income bracket | 2023/24 Marginal tax rate |
| Less than $18,200 | 0 |
| $18,201 to $45,000 | 19% |
| $45,001 to $120,000 | 32.5% |
| $120,001 to $180,000 | 37% |
| Over $180,000 | 45% |
As you can see, the following changes will come into effect from July 1.
- The current 19% tax bracket will be reduced to 16%.
- The current 32.5% tax bracket will be reduced to 30%.
- The threshold for the 37% tax bracket will be increased from $120,000 to $135,000.
- The threshold for the 45% tax bracket will be increased from $180,000 to $190,000.
Take Advantage of the Tax Savings this Financial Year
If you would like to take advantage of all the available strategies this financial year, please contact your accountant or advisor on 03 8419 9800 for more information.
This content has been prepared by Wilson Pateras to further our commitment to proactive services and advice for our clients, by providing current information and events. Any advice is of a general nature only and does not take into account your personal objectives or financial situation. Before making any decision, you should consider your particular circumstances and whether the information is suitable to your needs including by seeking professional advice. You should also read any relevant disclosure documents. Whilst every effort has been made to verify the accuracy of this information, Wilson Pateras, its officers, employees and agents disclaim all liability, to the extent permissible by law, for any error, inaccuracy in, or omission from, the information contained above including any loss or damage suffered by any person directly or indirectly through relying on this information. Liability limited by a scheme approved under Professional Standards Legislation.
