Australia's cost-of-living relief: $300 tax offset in budget

Australia's budget to include $300 tax offset for workers amid inflation fears

The federal government is preparing a cost-of-living package for next week’s budget, with Treasurer Jim Chalmers considering a tax offset for millions of workers. The proposed measure would give between $200 and $300 to every Australian earning a wage or salary. Meanwhile, the International Monetary Fund has cautioned against broad stimulus spending as inflation pressures grow.

The so-called 'earned income offset' would apply only to taxed wages, not investment income, and would not be means-tested. It follows earlier relief measures, including $3 billion in fuel excise cuts and Labor’s $1,000 instant tax deduction. However, the handout is limited to the current financial year and does not provide a permanent tax cut.

The IMF has urged governments to ensure any fiscal support remains targeted, temporary, and funded within existing budgets. Its warning comes as the Reserve Bank of Australia faces calls for a third straight interest rate rise today, adding pressure on mortgage holders. When questioned on Monday, Chalmers did not dismiss the possibility of future tax cuts. The offset is expected to feature prominently in next Tuesday’s budget as part of a broader cost-of-living strategy.

The proposed offset would deliver short-term relief to workers, but its impact depends on broader economic conditions. With inflation driving concerns over further rate hikes, the government’s budget measures will be closely watched. The IMF’s advice underscores the need for restraint in stimulus spending as households face rising costs.