The Government did not make any changes to the currently legislated tax rates for residents that are to apply from 1 July 2012 – these were legislated in the package of carbon tax Bills that were passed and received Royal Assent in 2011. Note that the flood levy is also scheduled to cease on 30 June 2012.
The Clean Energy (Income Tax Rates Amendments) Act 2011 has amended the Income Tax Rates Act 1986 to deliver 2 rounds of tax cuts through increases in the tax-free threshold and corresponding adjustments to statutory tax rates and thresholds – the first, from 1 July 2012 and, the second, from 1 July 2015:
from 1 July 2012, the tax-free threshold will be increased to $18,200, and the first 2 marginal tax rates will be increased from 15% to 19% and from 30% to 32.5%, respectively; and
from 1 July 2015, the tax-free threshold will be $19,400, and the second marginal tax rate will be increased from 32.5% to 33%.
The personal income tax rates and thresholds are summarised for resident taxpayers in the table below:
|
Personal income tax rates and thresholds |
||||||
| 2011-12 | 2012-13 | 2015-16 | ||||
| Threshold | Rate | Threshold | Rate | Threshold | Rate | |
| 1st rate | $6,001 | 15.0% | $18,201 | 19.0% | $19,401 | 19.0% |
| 2nd rate | $37,001 | 30.0% | $37,001 | 32.5% | $37,001 | 33.0% |
| 3rd rate | $80,001 | 37.0% | $80,001 | 37.0% | $80,001 | 37.0% |
| 4th rate | $180,001 | 45.0% | $180,001 | 45.0% | $180,001 | 45.0% |
For the 2012-13 year, the rates for resident individuals (excluding the 1.5% Medicare levy) are as follows:
2012-13 income year
| Taxable income $ | Tax payable $ |
| 0 – 18,200
18,201 – 37,000 37,001 – 80,000 80,001 – 180,000 180,001+ |
Nil
Nil + 19% of excess over 18,200 3,572 + 32.5% of excess over 37,000 17,547 + 37% of excess over 80,000 54,547 + 45% of excess over $180,000 |
Note there are also changes concerning individuals and trustees and access to a tax-free threshold for those who are residents for only part of a year. From 1 July 2012, part-year residents and trustees will be able to access a tax-free threshold of at least $13,464. Their access to the remaining $4,736 of the full tax-free threshold will be pro-rated. From 1 July 2015, part-year residents and trustees will be able to access a tax-free threshold of at least $14,664. Their access to the remaining $4,736 of the full tax-free threshold will be pro-rated.
Low income tax offset
The Clean Energy (Tax Laws Amendments) Act 2011 has amended the ITAA 1936 to adjust the operation of the low-income tax offset (LITO):
from 1 July 2012, individuals will be entitled to receive the LITO if their taxable income is below $66,667. The maximum value of the LITO will be reduced from $1,500 to $445 and will be phased out at the rate of 1.5 cents for every dollar of taxable income over $37,000. Together with the other changes, this will mean low-income earners will have an effective tax-free threshold of $20,542; and
from 1 July 2015, individuals will be entitled to receive the LITO if their taxable income is below $67,000. The maximum value of the LITO will be reduced to $300 and will be phased out at the rate of 1 cent for every dollar of taxable income over $37,000. Together with the other changes, this will mean low-income earners will have an effective tax-free threshold of $20,979.
The changes to the LITO are summarised in the table below:
|
Low income tax offset |
|||
| 2011-12 | From 1 July 2012 | From 1 July 2015 | |
| Amount | $1,500 | $445 | $300 |
| Lower withdrawal limit | $30,000 | $37,000 | $37,000 |
| Upper withdrawal limit | $67,500 | $66,667 | $67,000 |
| Withdrawal rate | 4.0% | 1.5% | 1.0% |
[WTB 19, 8/5]