The following changes will affect individuals and families, the main ones being the introduction of the Low and Middle Income Tax Offset and the proposed changes to personal income tax rates.
The Low and Middle Income Tax Offset
The Low and Middle Income Tax Offset will be received in addition to the Low Income Tax Offset. The offset will be available from 1 July 2018 and will be received as a lump sum after an individual lodges their tax return.
Personal income tax
The Government has also proposed to increase the top threshold of the 32.5% personal income tax bracket from $87,000 to $90,000 from 1 July 2019.
The rates below do not include the Medicare Levy.
Additionally, from 1 July 2022 the Government will extend the 19% personal income tax bracket from $37,000 to $41,000 and increase the top threshold of 32.5% tax bracket from $90,000 to $120,000.
The Government plans to remove the 37% tax bracket entirely from 1 July 2024. This involves extending the 32.5% tax bracket from $120,000 to $200,000.
The Medicare Levy will remain at 2% despite it being previously announced that it would increase to 2.5%.
The Government intends to improve the integrity of the ‘notice of intent’ processes for individuals who want to claim personal superannuation contributions tax deductions.
From 1 July 2018 the Government will deny deductions for expenses incurred in relation to holding vacant residential or commercial land. This includes interest incurred to finance the acquisition of the land.
Supplementary amounts paid to a veteran (including pension supplement, rent assistance and remote area allowance) and full payments (such as the supplementary component) made to the partner or spouse of a veteran who dies will be exempt from income tax from 1 May 2018.
The ATO will be provided with $130.8m from 1 July 2018 to increase their compliance activities. These will target individual taxpayers and their tax agents.
Schemes that involve licencing a person’s fame or image to another entity such as a related trust or company to avoid income tax will be curtailed.
Follow the links to read about the sections that are relevant to you and if you have any queries about the impact of these announcements then please don’t hesitate to contact us.