The federal budget is set to drop on March 29 and the government is pulling out all the stops to distract voters from its buffoonery and scallywagging. PM Scott Morrison and Treasurer Josh Frydenberg are attempting to lure in Aussies with a tax offset which is kinda free money but not really? Here’s the tea.
This past year folks across the country have been knocked around by everything from COVID to rising fuel prices to devastating floods. Quite frankly, we deserve economic relief and we deserve it now pls and thank you.
During an interview with the ABC, Frydenberg did his best normal human being impression:
“We fully understand that the number-one topic around kitchen tables of Australia is cost of living. And so there will be some relief in this budget.”
BUT, and there’s always a “but” — he also flagged that any targeted relief via tax offsets (AKA: free money) might not be as spenny as in previous years.
“We don’t want to overheat the economy… From the start of this crisis, our economic support has been temporary, targeted and proportionate to the challenge we face.”
For most of its existence, the Morrison government’s flagship economic policy has been the Low and Middle Income Tax Offset (LMITO).
We still don’t know whether the LMITO will make a return in this year’s budget. Regardless, here’s how it worked in previous years to give you an idea.
As per the Australian Tax Office (ATO) “these offsets can only reduce your tax payable to zero, it is not a bonus payment.”
“The amount of available offset depends on your individual circumstances”.
This means it’s different to something like a COVID disaster payment which technically was free money in the simplest of terms.
The LMITO functions as a way to reduce your end of financial year tax burden.
For example, say you earned less than $37k per year and were scheduled to pay $2000 in tax. You’d only need to pay $1745 because the offset gave you a $255 discount.
It’s sorta free money (???) but in the most horrific and boring way possible.
Another tax offset looks likely when this year’s budget drops later in the month.
However, Frydenberg probably doesn’t want to bust out another LMITO considering it costs $7 billion annually as per Guardian Australia.
“Crisis level economic support must not become entrenched,” the treasurer said on Friday.
“With our tight labour market and our strong economic recovery, continued support at those levels would do more harm than good. It would risk putting further pressure on inflation, interest rates and cost of living.”
The more likely outcome is that Aussies will cop another tax offset which is similar but less expensive than the LMITO. The ALDI version, shall we say?