Low and middle-income earners will get tax cuts worth up to $10.50 a week in tomorrow’s budget.
The ABC understands that while the measure will start on July 1, the tax break will come in the form of a bigger end-of-year tax rebate.
The tax relief will be delivered by an increase to the Low Income Tax Offset (LITO) which doesn’t show up in weekly or fortnightly pay packets.
At the moment, the LITO is worth $445 a year for people earning below $37,000 annually.
It gradually reduces and cuts out completely when people earn $66,667 a year.
Treasurer Scott Morrison is expected to announce the value of the offset will more than double to $1,000.
It will be extended to people on incomes of about $90,000 a year, the ABC understands, and would still be phased out so that the more a person earns, the lower the rebate they would receive.
That would mean an extra $10.50 a week for those who receive the maximum benefit.
Giving a tax cut in this way is cheaper for the Government because it is targeted at low to middle-income earners and would not flow through to people on higher incomes.
It is tipped to cost the Government about $4 billion to $5 billion a year.
When Mr Morrison was pressed on whether this tax break would be dismissed as only worth a hamburger and a milkshake, he argued that it had been a long time since there had been real tax relief.
He said the Government had always said it would provide tax relief that was both affordable and responsible.
Choosing a less expensive way of offering a tax break means the Government can also return to surplus more quickly.
It had forecast a surplus in 2020-21, but is now likely to announce that it can be in surplus in 2019-20.