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Rates going up? Yikes. Tax breaks could help

I think we all let out a big sigh of frustration after an inflation report yesterday came out higher than the previous month.

That can't be good.

We all know that the RBA talks about getting inflation down to what they consider an 'acceptable level'. So an indication that it's gone up, albeit even for the month, doesn't feel reassuring.

The main weapon the RBA has in its arsenal to tackle inflation is to raise the cash rate, which is naturally, almost always passed on by the banks to home loan customers by way of higher variable interest rates.

So with the whispers that a rate 'rise' between now and the end of the year becoming louder., it raises the question whether will it be that one step too far for many home loan customers already feeling the pinch.

Could there actually be a saving grace? A knight in shining armour to save the day? Potentially..... tax cuts.

As of July 1, (believe it or not which is next Monday), stage 3 tax cuts come into effect for all Australians.

What does this mean? Find your income bracket below to find out.


Annual income

Tax cut

Extra weekly income

Extra monthly income

















So as of next week, you practically get a 'pay rise' due to these tax cuts coming into force. In a family with two working adults, you can double the above amounts depending upon what each is earning.

Will it make a difference?

Depending up the size of your mortgage and your current interest rate and whether you are flying solo or have a spouse/partner earning an income, if a rate rise is to come our way soon these tax cuts could go some of the way to offset an increase in repayments.

Something is better than nothing

But with continued cost of living pressures, what will ultimately make a difference to many home loan customers on a variable rate is the point in time when we hit that tipping point when rates start to come down.

As of yesterday, this felt a little further away than it has been for the last few months. Only time will tell if the RBA reacts to this inflation data in a way that few people want.

It's another watch and wait.


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