How to use the recent tax cuts as an opportunity to build additional wealth‪!‬ Finance & Fury Podcast

Welcome to Finance and Fury
You might have seen the budget that came out last week – in this episode we will be looking at the bringing forward of the tax cut – but also using this as an opportunity and what to do with it
The budget and the tax cuts –
The Government passed its Budget tax cuts last Friday, after bringing forward major cuts slated for July 2022 to July 2020 So this tax cut will be back dated –people will get a refund at tax time or the PAYG will be adjusted for lower taxes for the rest of the FY Around 11.6 million Australians are set to get some benefit There are about 12.6m employed people in Australia – so this affect the majority of the working aged population Obviously if you earn less than the $18,200 threshold – you don’t pay any taxes so when taxes are cut – cause you don’t pay any taxes you don’t get a reduction in what you pay – if you pay nothing then it is hard to reduce this beyond zero Who will be affected – based around the taxable income thresholds
Earning up to $37k – tax relief of up to $510 – for 2.4m income earners Earning between $37k and $48,000 – get tax relief between $510 to $2,160 – for 1.8m individuals Earning between $48k to $90k - get tax relief between $2,160 to $2,295 – for 4.6m Earning between $90k to $126k - get tax relief between $2,295 to $2,745 – for 1.5m Earning above $126k – get $2,565 in reduced tax So with the tax cuts - You will likely have more money due to the tax cuts – Why the Government has done this –
Treasury estimates that reducing the personal income tax burden on Australians through this measure will boost GDP by around $3.5 billion in 2020–21 and $9 billion in 2021–22 and will create an additional 50,000 jobs by the end of 2021–22 – based around big assumptions Demand side economics – that people will spend – two ways to achieve – give people money directly or indirectly allow them to keep more of their money through tax cuts – so tax cuts are in Hence why they are giving out cash payments to pensioners - got some economists saying that vouchers should be employed instead – spending forced rather than people saving This tax cut pretty predicably been slammed though – canned a ‘Perverse outcome’ of tax cuts Analysis by The Australia Institute found that the top 20 per cent of earners will receive more than 40 per cent of the benefit of the tax cuts – reading some of the comments from The Australia Institute senior economist Matt Grudnoff “It is clear that most of this tax cut will go to those who are far more likely to save it. Saving the tax cut is made worse during an economic crisis,” “People who are worried about losing their job are not keen to spend. Any additional money they get is likely to be used to pay down debt and increase savings in order to create a buffer against the growing uncertainty that they are feeling.” Grudnoff also noted that a large amount of the tax cut flowing through to low- and middle-income earners is temporary, in the form of the low- and middle-income tax offset. However, the tax cuts for high-income earners are baked in. “This leads to a situation where low- and middle-income earners will pay more tax next financial year than they pay this year. Effectively they face a tax increase next year when compared to this year.” Technically not true – the LITO is increasing to $700 from $445 It is the Low and Middle Income Tax offset that is in place for the next 4 financial years - A duel income household of two individuals earning $60,000 each will benefit by a tax savings of $4,320 annually when compared to the 2018 brackets , while another childless household where one is a low-income earner and the other is unemployed would see a benefit of $500. And a household with no children where both adults are unemployed would see no benefit from those policy measures.  “Meanwhile, high income households gain the most from tax cuts.