A package of 10 Bills was introduced in the House of Reps this morning [Thur 17.8.2016] to implement the Government’s 2017-18 Budget announcement to increase the Medicare levy by 0.5% to 2.5% from 1 July 2019 in order to help finance the National Disability Insurance Scheme (NDIS).

Other rates that are linked to the top personal tax rate, such as the FBT rate, excess super contributions tax, TFN withholding tax, franking deficit tax, etc, would also be increased. One-fifth of the revenue raised by the Medicare levy from 1 July 2019 would be credited to the National Disability Insurance Scheme Savings Fund Special Account.

The main Bill, the Medicare Levy Amendment (National Disability Insurance Scheme Funding) Bill 2017, proposes to amends the Medicare Levy Act 1986 to increase the Medicare levy rate from 2 to 2.5% of taxable income for the 2019-20 income year and later income years. The other Bills incorporate the change in the Medicare levy rate into other Acts setting tax rates that take the rate of Medicare levy into account. The other Bills in the package are:

The Bills have been referred to the Senate Economics Legislation Committee for inquiry and report by 16 October 2017.

CONSEQUENTIAL TAX RATES INCREASED: Under the proposed changes, as a consequence of the proposed Medicare levy increase, other related rates would also increase:

  • The FBT rate for the 2019-20 and later FBT years would be 47.5%.
  • The Medicare levy component of the rate of income tax on No-TFN contributions income would be 2.5% for the 2019-20 income year and later income years.
  • The superannuation excess non-concessional contributions tax rate would be 47.5% for the 2019-20 financial year and later financial years.
  • The Medicare levy component of the superannuation excess untaxed roll-over amounts, and the Medicare levy component of the income tax (TFN withholding tax (ESS)) tax rate would be 2.5% for the 2019-20 income year and later income years.
  • The family trust distribution tax rate would be 47.5% for the 2019-20 income year and later income years.
  • The trustee beneficiary non-disclosure tax (no 1) and (no 2) rates would be 47.5% for the 2019-20 income year and later income years.
  • The untainting tax rate would be 48.5% for the 2019-20 income year and later income years.

DATE OF EFFECT: This measure would apply to the 2019-20 income year and later income years. The amendments to the Fringe Benefits Tax Act 1986 would apply to the year of tax beginning on 1 April 2019 and later years of tax.

[APH website: Bills Digest for MLA(NDISF) Bill 2017; Bill; EM; LTN 156, 17/8/17; TM August]

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