Understanding the Impact of the 2024 Tax Rate Changes

As we approach the end of the longest month of the year (it feels like there are 425 days in Jan!) we are nearing a time where there will be a noticeable change in our tax landscape.

The Australian government has introduced changes to the individual tax rates, with a focus on promoting economic growth, simplifying the tax system, and ensuring fairness.

The new tax rates, effective from the 2024 financial year, are structured to provide relief to low and middle-income earners.

?Chart: 2024 Tax Rate Changes in Australia

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The chart above illustrates the new tax brackets and rates for the 2024 financial year. As depicted, individuals earning up to $45,000 will benefit from a lower tax rate, while those in the higher income brackets will experience a marginal increase.

?Potential Impact on Borrowers:

?1.?????? Increased Disposable Income for Some Borrowers:

?Borrowers with incomes below $45,000 will experience a reduction in their tax liability, translating to increased disposable income. This extra financial breathing room may empower them to consider new borrowing opportunities or better manage existing debts.

?2.?????? Marginally Higher Tax Burden for High-Income Borrowers

High-income borrowers, earning above $180,001, will face a slight uplift in their tax obligations. While the impact may not be drastic, it could influence financial planning for those considering large loans or significant financial commitments.

?3. Potential for Altered Borrowing Behaviour

? The changes in tax rates may influence individuals' borrowing behaviour. Those who find themselves in lower tax brackets might be more inclined to take on additional debt, while higher-income individuals may re-evaluate their financial strategies to mitigate the impact of increased taxation.

4. Ripple Effects on Mortgage and Loan Markets

?The altered tax landscape may have ripple effects on the mortgage and loan markets. Lenders and financial institutions may need to reassess their risk profiles and lending criteria in response to changes in borrowers' disposable incomes.

?The potential impact of the changes to come will vary based on individual income levels, financial goals, and borrowing behaviour but now is a great time to come have a chat with me to we can put a game plan in place for the year ahead.

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*Please Note - I am not a tax advisor and the above article is based solely on my personal options. I can, however introduce you to some amazing experts in this area should you wish