2021-22 Budget: Treasurer “committed to” Stage 3 tax cuts (30% out to $200k) and excise refund cap to be tripled to $350k, for small brewers and distillers

In the lead up to the 11 May 2021 Federal Budget, the Treasurer announced that the current income tax rates would remain until 2024/25, when the ‘Stage 3’ extension of the 30% rate, would apply all the way up to $200,000. He also signalled that small scale brewers and distillers would have their excise cap more than tripled (from $100k to $350k) to match the incentive given to small wine growers.

See below for further details.

[Tax Month – May 2021]

Stage 3 Tax Cuts coming as planned – in 2024-25

On 2 May 2021, the Treasurer confirmed that the Government is committed to the Stage 3 tax cuts for individuals.

• As part of the changes to individual tax rates enacted by the Government after the last election, the current tax rates will apply until 2023-24.
• From 2024-25, taxable income between $45,000 and $200,000 will be taxed at 30% and taxable income in excess of $200,000 will be taxed at 45% (ie the Stage 3 tax cuts).
• Notably, the Stage 2 tax cuts were brought forward, from 2022/23 to 2020-21, by the Treasury Laws Amendment (A Tax Plan for the COVID-19 Economic Recovery) Act 2020 (Act, Bill), but the start date and rates for Stage 3 were left unchanged by this legislation.

The Treasurer did not make any mention of any possible changes to the low income tax offset, which was brought forward from 2022-23 to 2020-21 by the same legislation. Nor was there any mention of the low and middle income tax offset, which is due to cease this financial year, ie 2020-21.

The Treasurer said this in a ‘doorstop interview’.

Triple excise exemption for brewers and distillers

On 1 May 2021, the Treasurer and Assistant Treasurer jointly announced that the excise refund cap for small brewers and distillers will increase to $350,000 from 1 July 2021.

• From 1 July 2021, eligible brewers and distillers will be able to receive a full remission of any excise they pay, up to an annual cap of $350,000, effectively tripling the excise refund cap for small brewers and distillers from $100,000 per year.
• Currently, eligible brewers and distillers are entitled to a refund of 60% of the excise they pay, up to an annual cap of $100,000.
• The media release states that this will align the benefit available under the Excise Refund Scheme for brewers and distillers with the Wine Equalisation Tax (WET) Producer Rebate.

[5.5.21; LTN 82, 3.5.21]