Budget 2016 | Personal income tax
Increase to Medicare Levy low-income thresholds
From the 2015-16 financial year, the Medicare Levy low-income threshold will be indexed for individuals and families. The threshold for singles will increase to $21,335 per annum and for couples with no children will increase to $36,001 per annum. For those individuals and couples who are eligible for Seniors and Pensioners Tax Offset (SAPTO) the thresholds will increase to $33,738 per annum and $46,966 per annum respectively. The additional threshold amount for each dependent child or student will increase to $3,306 per annum.
The increase in these thresholds takes into account movements in the CPI.
The Tax and Superannuation Laws Amendment (Medicare Levy and Medicare Levy Surcharge) Bill 2016 which proposes the increase has passed both houses of government as of 3 May 2016, but is still yet to receive Royal Assent.
Changing the income tax thresholds
From 1 July 2016, the income threshold where the 37% marginal tax rate starts to apply will increase from $80,001 to $87,001.
Extending the existing freeze on the Medicare Levy Surcharge and Private Health Insurance Rebate thresholds
From 1 July 2018, the Medicare Levy Surcharge and Private Health Insurance Rebate will remain paused for three more years. The rebate and surcharge levels applicable from 1 April 2016 to 31 March 2017 are:
Currently these thresholds are legislated to be paused from the 2014-15 tax year through to the 2017-18 tax year. As a result of this proposal, the thresholds would remain frozen until 30 June 2021. This means that clients earning near or above $90,000 for a single or $180,000 for a family, may expect to pay higher private health insurance premiums or a higher Medicare Levy Surcharge where no approved private health insurance is held.
Negative gearing
The Government has announced officially that they will not remove or limit negative gearing because it would increase the tax burden on Australians trying to invest for their future.
Budget repair levy
On 30 June 2017, the three year Temporary Budget Repair Levy on high income individuals will cease. Up until then the temporary levy will continue to apply at a rate of two percent on individuals’ taxable income in excess of $180,000 per annum. This will mean that the top marginal tax rate will reduce from 49% to 47% from 1 July 2017.
