Tax offset could be extended in May budget

·3-min read

Millions of Australians may not lose a tax benefit after all when Treasurer Josh Frydenberg hands down his budget.

The low- and middle-income tax offset (LMITO), which is worth up to $1080 and benefits people with a taxable income between $48,000 and $90,000, ends in June.

But media reports suggest this bonus will be extended for another year at a cost of about $7 billion.

The treasurer avoided confirming whether this will be the case on May 11 when asked by journalists in Perth.

"The coalition is always the party of lower taxes," Mr Frydenberg replied.

"That's our record and that will continue to be the message and the policies we deliver going forward."

The tax offset was set up as a one-off economic stimulus measure during the coronavirus pandemic.

Analysts at the Bankwest Curtin Economics Centre have estimated about 3.4 million taxpayers - 50 per cent of whom were women - would lose out if it was dropped.

The tax offset is claimable when people submit their tax returns.

But Cassandra Goldie, CEO of welfare peak body ACOSS, warns against further tax cuts, saying they would undermine the ability to fund quality services which Australians rely on.

"We need to generate decent, new jobs in the community service sector, which is made up of 80 per cent women, so that we can properly resource important services like aged care, disability, mental health, homelessness and domestic violence services," Dr Goldie said.

Media reports have suggested the government is putting together a $10 billion aged care package as a centrepiece for the budget, in response to the royal commission into the sector.

The soaring price of iron ore does suggest the budget will be in a far better shape than it was just six months ago.

The iron ore price is nudging ever closer to its record high of around $US193 per tonne.

In the mid-year budget review released in December, Treasury had based its revenue forecast on a price of just $US55 per tonne.

"We have always been conservative with the iron ore price," Mr Frydenberg told reporters.

"Obviously, there's been a greater boost to the revenue take of the Commonwealth as a result of the higher iron ore price."

As a rule of thumb, for every $US1 rise in the price of iron ore, the government gains $A250 million in revenue a year.

This week the government announced more than $1 billion in climate change initiatives - the latest a $565.8 million investment for international collaboration on low emissions technology.

Scott Morrison says this will help create up to 2500 jobs by backing low emissions technology partnerships internationally and initaitives by co-funding research and projects.

"These partnerships mean Australia will keep leading the way in low emissions technology that also means more jobs here at home," the prime minister said.

The announcement came the day after the government said it would be investing $263 million in carbon capture and storage and another $275.5 million to set up regional hydrogen hubs domestically.