Personal Income Tax Relief
The threshold at which the 37% marginal tax rate for individuals commences will increase from taxable incomes of $80,000 to $87,000 from 1 July 2016.
This measure reduces the marginal income tax rate on taxable incomes between $80,000 and $87,000 from 37% to 32.5% from the 2016/17 income year. It should prevent approximately 500,000 taxpayers facing the 37% marginal income tax rate in the 2016/17 income year. It should also ensure that the average full-time wage earner will not move into the 37% tax bracket in the next three years.
Medicare Levy And Surcharge – Low-Income Thresholds To Increase
The low-income thresholds for the Medicare levy and surcharge will increase from the 2015/16 income year.
Medicare Levy
The increases take into account movements in the consumer price index (CPI) so that low-income earners generally continue to be exempted from the Medicare levy.
The threshold for singles will increase to $21,335 (up from $20,896 for the 2014/15 year). For couples with no children, the threshold will increase to $36,001 (up from $35,261 for the 2014/15 year).
For single seniors and pensioners, the threshold will be increased to $33,738 (up from $33,044 for the 2014/15 year). For senior and pensioner couples with no children, the threshold will be increased to $46,966 (up from $46,000 for the 2014/15 year).
The child-student component of the income threshold for all families increases to $3,306 (up from $3,238 for the 2014/15 year).
Key aspects of the changes to the Medicare levy are summarised in the following table.
Medicare Levy Surcharge
The Bill also amends the A New Tax System (Medicare Levy Surcharge — Fringe Benefits) Act 1999 from the 2015/16 income year. It increases the Medicare levy surcharge low-income threshold in line with movements in the CPI for:
- the surcharge payable on taxable income for a person who is married (or both married and a beneficiary of a trust) to $21,335 (up from $20,896 for the 2014/15 year), and
- the surcharge on reportable fringe benefits to $21,335 (up from $20,896 in the 2014/15 year).
Pausing Of Medicare Levy Surcharge And Private Health Insurance Rebate Thresholds
The pause in the indexation of the income thresholds for the Medicare levy surcharge and the private health insurance rebate will continue for a further three years. This will achieve efficiencies of $744.2m over three years from 1 July 2018.
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