Promised tax cuts ‘don’t have to wait for parliament’

The ATO confirms the PM’s tax cuts will be delivered for the current financial year.

Treasurer Josh Frydenberg in Canberra yesterday. Picture: AAP

Scott Morrison says his promised tax cuts will still be delivered for the 2018-19 financial year even if parliament does not sit before July 1, with the Australian Taxation ­Office confirming it can enact the changes retrospectively.

In his April 2 budget, Josh Frydenberg outlined a plan to increase the low and middle-income tax offset (LMITO) from $530 to $1080 — a move Labor supported. Under the overhaul, those on taxable incomes between $48,000 and $90,000 are eligible to receive the maximum offset of $1080. It will phase out for those on $90,000 to $126,000.

“Tax relief will be delivered in 2019-20 as promised,” a spokeswoman for the Prime Minister said yesterday. “And (it) will not be delayed by a year by the parliament not sitting in June.”

An ATO spokesman told The Australian the changes to the LMITO could be administered retrospectively if the enabling legislation was passed after July 1.

“Following media commentary, we would like to clarify that in respect of announced tax cuts, while we do need law change, there are things we can do administratively,” he said.

“If the Labor Party agrees to support the Coalition tax cuts as announced, we would be able to update the tax withholding schedules to allow the tax cuts to be reflected in people’s take-home pay.

“If the law for these tax cuts passes after June, we could also retrospectively amend assessments to provide the tax cut once the law is passed.”

Mr Morrison and the Treasurer yesterday met to discuss the economy and the government’s tax cut package, with Reserve Bank governor Philip Lowe delivering a major speech flagging the prospect of cutting the cash rate to a record low in the first week of June.

Mr Frydenberg provided a reassurance that the legislation to assist lower and middle-income earners would be the “first priority of business once parliament resumes … It is not likely the parliament will resume before the end of June because we have to wait for the writs to be returned. But let me be very clear: the tax relief outlined in the budget will be delivered to millions of Australians.”

Opposition Treasury spokesman Chris Bowen said Australians might have to wait another year to receive the tax break. “The election is not even a couple of days over and Scott Morrison has broken his promise,” he said. “If the Australian people have to wait another year for the tax cuts, I think it’s an indictment on his government and the character of the Prime Minister.”

While there appears to be support in the Senate for the plan to give larger tax breaks to low and middle-income earners, the more ambitious phases of the package face a more serious roadblock.