On 1 September 2016, the Treasurer introduced the Treasury Laws Amendment (Income Tax Relief) Bill 2016 to amend the rates act to increase the threshold for the 32.5% from $80,000 to $87,000.
The result will be that individuals (voters) will now need taxable income over $87,000 to start paying tax at 37% rate (that is, on that part of their taxable income that is over $87,000).
The non-resident tax schedule will also be amended as a result of this Bill to increase the first income tax bracket to $87,000 (so that the 32.5% tax rate applies from the first dollar up to $87,000, when the 37% rate starts to apply.
There are no changes to the rates (only this threshold).
Context of amendments
- An individual will pay $0 tax on taxable income up to $18,200 because the tax-free threshold is currently $18,200.
- After the tax-free threshold a rate of tax of 19 per cent is payable on the band of taxable income between $18,201 and $37,000.
- The next tax rate is 32.5 per cent and it applies to the band of taxable income between $37,001 to $80,000. This is the band where the threshold is to be increased to $87,000.
- Then a rate of tax of 37 per cent applies to the band of taxable income between $80,001 to $180,000
- And finally, a tax rate of 45% applies to the band of taxable income that is over $180,000.
- There is a 2% ‘Medicare Levy’ (over relatively low thresholds).
- And for one more year (the current 2016-17 year) there is there used to be a ‘Budget Repair Levy’ of 2% applicable to income that bears the top marginal rate of 47% (eg: income over $180,000, unearned income of minors and trust income to which no beneficiary is presently entitled).
Bill referred to the Senate Economics Legislation Committee
The Bill was referred to the committee on 15.9.16 for report by 10.10.16.
[APH website – Bills Digest] [LTN 179, 15/9/16]