As of 1 July 2024, we are all receiving a tax cut. This means that your employer will be depositing an extra (approximately):
$181 per month (if you are on $100,000 p.a.)
$310 per month (if you are on $150,000 p.a.)
$377 per month (if you are on $200,000 p.a.)
After years of many people feeling financially 'tight' with soaring interest rates and inflation, it can be tempting to spend this extra money on niceties. However, I want you to consider the long term effects of 'spending' this money, rather than 'saving' this money.
For you see, $310 per month may not sound like a lot for someone earning $150,000, however it turns out to be a whopping $49,151 over 10 years when added together and when factoring in the wonders of compounding returns.
Income (excluding Super) | 2023/2024 Tax Payable | 2024/2025 Tax Payable | Tax Reduction | 10 Year Benefit of Saving * |
$100,000 | $24,967 | $22,788 | $2,179 | -$28,721 |
$150,000 | $43,567 | $39,838 | $3,729 | -$49,151 |
$200,000 | $64,667 | $60,138 | $4,529 | -$59,696 |
*Assumes a 6% net rate of return (for instance by holding the funds in your offset account).
If both members of your couple are on $150,000, then this 10 year benefit is almost $100,000! Imagine what this money could do; from paying for children's school fees to retiring a number of years earlier!
It's always important to think big picture with your finances! If you need any help with your cashflow you can download our free cashflow guide or book in your obligation free initial appointment.