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).
[APH website – Bill Tracker] [APH – Bill] [APH – EM] [ATO – Budget Repair Levy] [LTN 169, 1/9/16]
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]