Australia

New tax cuts priority but timing unclear

Re-elected Prime Minister Scott Morrison will turn his mind to economic matters on Tuesday. (AAP)

Prime Minister Scott Morrison wants to give Australians extra tax relief as soon as possible but exactly when he can remains up in the air.

Australians earning up to $90,000 could still get the extra tax relief promised by the coalition this year even if it doesn't clear parliament by tax time.

But it remains to be seen if the proposed tax cuts will pass parliament at all, with key crossbench senators still to pledge their support for the plan.

Prime Minister Scott Morrison and Treasurer Josh Frydenberg have made legislating the tax cuts their top priority, but are at the mercy of the Australian Electoral Commission on when they can bring parliament back.

Parliament can't sit until the AEC returns the election writ to the governor general, which is due by June 28.

"That needs to be done. There is a process that takes place," Mr Frydenberg told reporters in Canberra on Tuesday.

In a helpful twist for the government, the Australian Tax Office says it can retrospectively amend tax assessments to provide cuts if the laws pass after June.

The agency could also make administrative changes to provide tax cuts, if the opposition backs them.

"If the Labor party agrees to support the coalition tax cuts as announced, then we would be able to update the tax withholding schedules, to allow the tax cuts to be reflected in people's take home pay," the ATO says on its website.

Labor has backed the coalition's promised doubling of a tax offset for low and middle income earners, which would mean people earning up to $90,000 would get to score a rebate of up to $1080.

But it has taken issue with later stages of the coalition's tax plan, set to be fully rolled out by mid-2025, including flattening the marginal tax rate to 30 per cent for everyone earning between $45,000 and $200,000.

Mr Frydenberg says the coalition's tax plans are a package deal.

"It is important that this is dealt with as a package, because we are talking not just about immediate tax relief, but we're also talking about long-term structural reform."

Government senator Zed Seselja is urging Labor to support the changes in order to give them a seamless course through parliament, avoiding the need for the crossbench votes.

Greens leader Richard Di Natale says the minor party won't support the income tax cuts.

The party held onto all of its six Senate seats up for re-election, taking the Greens' total to nine.

"We're not going to support tax cuts to people on half a million dollars ... if any support is going to be given it needs to be targeted at people on low incomes," he told ABC radio.

Reserve Bank of Australia Governor Philip Lowe says not rolling out the doubled tax offset this year would mean household income growth would be 0.3 per cent lower than it could be.

"That is moving in the wrong direction," he said after a speech in Brisbane on Tuesday.

Mr Frydenberg expected to meet with Dr Lowe and the Australian Prudential Regulation Authority on Wednesday.

Stay up to date with SBS NEWS

  • App
  • Subscribe
  • Follow
  • Listen
  • Watch