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Budget 2016: Tax – Personal

Published 4th May 2016

Change to income tax thresholds – SMALL WIN

The current $80,000 threshold above which each $1 earned is taxed at 37 cents will be increased to $87,000 from 1 July 2016. The higher income cut-in means tax payable by middle income earners will be reduced from 37 cents to 32.5 cents for all income earned between $80,001 and the new threshold of $87,000. Middle to high income earners will effectively get a tax cut under these measures, however low-income earners miss out.

This equates to a tax saving of around $315 a year (ignoring Medicare levy) for those on incomes between $80,000 and $180,000.

Taxable income (current) Tax payable* (current) Taxable income (proposed) Tax payable* (proposed)
$0 – $18,200 Nil $0 – $18,200 Nil
$18,201 – $37,000 19c for each $1 over $18,200 $18,201 – $37,000 19c for each $1 over $18,200
$37,001 – $80,000 $3,572 plus 32.5c for each $1 over $37,000 $37,001 – $87,000 $3,752 plus 32.5c for each $1 over $37,000

$80,001 – $180,000 $17,547 plus 37c for each $1 over $80,000 $87,001 – $180,000 $19,822 plus 37c for each $1 over $87,000
$180,001 and over $54,547 plus 45c for each $1 over $180,000 $180,001 and over $54,232 plus 45c for each $1 over $180,000

*The above rates do not include the two per cent Medicare levy or the 2 per cent temporary budget repair levy (expires on 30 June 2017).

Increased Medicare low income thresholds – LOSS

The Medicare levy low-income thresholds for singles, families, and single seniors and pensioners will be increased from the 2015/16 financial year, to take account of movements in the Consumer Price Index (CPI) so that low-income taxpayers generally continue to be exempted from paying the Medicare levy.

Family Situation No Medicare levy payable in 2015/16 if taxable income is below:
Individuals $21,335
Couples (no children) $36,001
Single seniors and pensioners $33,738
Senior and pensioner couples (no children) $46,966
Additional amount for each dependent child or student $3,306

Medicare levy income threshold and rebate pause extended – SMALL WIN

The Government will continue the pause on indexation of the income thresholds for the Medicare Levy Surcharge and Private Health Insurance Rebate for a further three years from 1 July 2018.

For the period of 1 July 2015 to 30 June 2021, the income* tiers will be paused at the 2014/15 threshold levels as follows.

Tier 1 Tier 2 Tier 3
Singles Up to $90,000 $90,001 – $105,001 $105,001 – $140,000 $104,001 +
Families Up to $180,000 $180,001 – $210,000 $210,001 – $280,000 $280,001 +
Surcharge 0% 1% 1.25% 1.5%

The family thresholds increase by $1,500 for each dependent child after the first.

*Taxable income + reportable fringe benefits + total net investment losses + reportable super contributions less the taxed element of a super lump sum within the low-rate cap.

HECS – WIN

The Government will delay the implementation of the higher education reforms announced in the 2014/15 Budget and the 2014/15 MYEFO by an additional year to undertake further consultation. Higher education funding arrangements for 2017 will be in line with currently legislated arrangements. The Government will also not proceed with the deregulation of university fees announced in the 2014/15 Budget.

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