Tax Cuts in the Pipeline For Millions of Australians. Will You Be One of Them?

by Dominique Schuh

The Australian sharemarket reversed early weakness as consumer sentiment remained firm and the British pound rebounded from heavy losses. Following a 1.2 per cent fall on the US S&P 500 index last night the S&P/ASX 200 index dropped 0.9 per cent at the open. But it bounced to close down 5.2 points, or 0.09 per cent, at 5474.6 led by the banks. The Australian dollar has edged higher as it continues to move within a narrow range amid growing expectations of a US rate hike. At 1700 AEDT on Wednesday, the local unit was trading at 75.78 US cents, up from 75.57 US cents on Tuesday.

What this means for you:
News came out this week that Millions of Australians are set to get a tax cut after government legislation cleared federal parliament with the support of Labour. The second highest income tax rate of 37 per cent will now kick in at $87,000 instead of $80,000. The changes, which passed the Senate on Wednesday, will deliver a maximum tax cut of $315 a year. While $315 per year will be a welcome saving for those tax payers, it just goes to show that you can't improve your position a whole lot by decreasing your "fixed costs." For long-term wealth accumulation, consider reducing your discretionary spending, but most importantly, focus on increasing your earnings.
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