Personal Tax Rates

Residents
There are no changes to the previously announced tax rates for individuals:

 

Residents: proposed rates and tax payable from 1 July 2009
Taxable income ($)	Tax payable ($)
0 - 6,000	Nil
6,001 - 35,000	Nil + 15% of excess over 6,000
35,001 - 80,000	4,350 + 30% of excess over 35,000
80,001 - 180,000	17,850 + 38% of excess over 80,000
180,001+	55,850 + 45% of excess over 180,000

The current and proposed personal tax rates and thresholds for resident individuals (excluding the 1.5% Medicare levy) are:

 

Residents: personal tax rates and thresholds
Current		From 1 July 2009		From 1 July 2010
Taxable income	Rate	Taxable income	Rate	Taxable income ($)	Rate
($)	(%)	($)	(%)	($)	(%)
0 - 6,000	0	0 - 6,000	0	0 - 6,000	0
6,001 - 34,000	15	6,001 - 35,000	15	6,001 - 37,000	15
34,001 - 80,000	30	35,001 - 80,000	30	37,001 - 80,000	30
80,001 - 180,000	40	80,001 - 180,000	38	80,001 - 180,000	37
180,001+	45	180,001+	45	180,001+	45
Low income tax offset
1,200		1,350		1,500

 

Low Income Tax Offset
Currently, the low income tax offset (LITO) is $1,200. Taxpayers eligible for the full LITO do not pay income tax until their annual income exceeds $14,000.

From 1 July 2009, the LITO will increase from $1,200 to $1,350, meaning the effective tax free threshold will increase to $15,000.  From 1 July 2010, the LITO will increase from $1,350 to $1,500, meaning the effective tax free threshold will increase to $16,000.

 

Senior Australians' Tax Offset
As a consequence of the changes in the low income tax offset, the tax free income threshold for eligible senior Australians will also change. Currently, eligible senior Australians have no tax liability until their incomes reach $28,867 for singles and $24,680 for each member of a couple. 

With the changes to the senior Australians' tax offset, eligible senior Australians will have no tax liability until their incomes reach:

• $29,867 for singles and $25,680 for each member of a couple in the 2009-10 income year;  and
• $30,685 for singles and $26,680 for each member of a couple in the 2010-11 income year.

Private Health Insurance Rebate and Surcharge Changes
The Budget contained the much anticipated measures to scale back the private health insurance rebate for individuals with higher earning capacities.  

From 1 July 2010, the Government will introduce three new "Private Health Insurance Tiers".  These are as follows:

Tier 1: for singles earning more than $75,001 (couples $150,001), the Private Health Insurance Rebate will be 20%, for those up to 65 years (25% for those over 65, and 30% for those over 70 years). The Surcharge for avoiding private health insurance will remain at 1%.

Tier 2: for singles earning more than $90,001 (couples $180,001), the Private Health Insurance Rebate will be 10%, for those up to 65 years (15% for those over 65, and 20% for those over 70 years). The Surcharge for avoiding private health insurance will be increased to 1.25%.

Tier 3: for singles earning more than $120,001 (couples $240,001), no Private Health Insurance Rebate will be provided. The Surcharge for avoiding private health insurance will be increased to 1.5%.

All income thresholds will continue to remain indexed to wages.

For low and middle-income earners, the existing 30, 35 and 40% Private Health Insurance rebates will remain in place.

 

Personal Income Tax – Medicare Levy Low Income Threshold
From 1 July 2008, the Government will increase the Medicare levy low-income thresholds to $17,794 for individuals (up from $17,309 for the 2007/08 income year) and $30,025 for individuals in families (up from $29,207 for the 2007/08 income year).

The additional amount of threshold for each dependent child or student will also increase to $2,757 (up from $2,682 for the 2007/08 income year).

The Medicare levy threshold for pensioners below Age Pension age will also be increased to $25,299, with effect from 1 July 2008 (up from $22,922 for the 2007/08 income year). This increase will ensure that pensioners below Age Pension age do not pay the Medicare levy when they do not have an income tax liability.