How to claim your tax cuts and when you get the cash

The Federal Government announced $50 billion in tax cuts last night, but what does that mean for you, how can you claim it and when will you start seeing the money? Find out the details.

The $50 billion in tax cuts announced last night could start flowing into bank accounts later this month, before a second big lump sum comes in later this year.

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There are two key parts to it. An offset which will get paid in a lump sum after July next year, and then an immediate hit you will start seeing in your pay packet almost immediately – if it passes Parliament.

In both cases there’s nothing you need to do and no forms to fill out at tax time - the adjustments will happen automatically.

Most Australians are likely to see about $1080 in tax cuts in July next year, plus an extra $20 in their pay packet each week from later this month. Picture: Barry Leddicoat

How much you get will depend on what you earn.

If you are on between $60-$90,000 a year, you can expect to see about an extra $20 in your pay packet each week.

This is because the rate at which your income is taxed is being dropped slightly – every dollar you earn between $37,000 and $45,000 will be taxed at 19 per cent instead of 32.5 per cent.

Then when you fill in your tax return after July next year, you’ll pay $1080 less in tax from the offset being passed on.

You will also get a little bit more than that, about $320, at tax time to backdate the $20 a week pay cut to July this year.

If you’re on $120-200,000 a year, you will be getting an extra $50 in your pay packet each week and $1280 when you file your tax after July next year.

This is a little bit more because the tax rate between $90,000 and $120,000 is also being dropped from 37c in the dollar to 32.5c in the dollar.

Treasurer Josh Frydenberg says the tax cuts announced in the Budget could start flowing from later this month. Picture: Sam Mooy/Getty Images

People on $90-126,000 will get a little bit more tax back again, up to $180, than those earning more than $126,000 because they still qualify for the low-and-middle income tax offset.

The tax office has said it can make the necessary changes to income tax to make the payments start flowing within a few weeks of the Bill passing Parliament, with Treasurer Josh Frydenberg saying it could start later this month.

Labor has indicated support for the income tax changes, but has yet to say if it will support a range of other measures being bundled in with them.