Tax rates for individuals remain the same except for the flood levy which applies to taxable income above $50,000 as follows:
o For taxable income between $50,001 to $100,000 the levy is 0.5%
o For taxable income portion above $100,001 or more the levy increases to 1%
Dependant spouse tax offset
Tax payers with a dependent spouse aged under 40 will no longer be eligible for the rebate. The change will not affect taxpayers whose dependant spouse is an invalid, is permanently disabled or is a carer. Dependant spouses with children are not affected by this measure because they are eligible for Family Tax Benefit Part B.
Changes to low income tax offset for minors (children under 18 years of age)
Up to now a minor who received trust distribution from a family trust could earn up to $3,333 tax free income. From 2011-12 year a minor will not be entitled to the low-income tax offset, therefore the tax free income will be only $416. For example if a family trust which used to make trust distributions to one child will be paying an extra $1,356 tax per child. This means that family trusts will need to review their investments which are held in their children’s name. Minors will continue to be able to use the low income tax offset on earned income from employment.
The medicare levy threshold increase will benefit many families. From 2010 -11 year the low-income threshold for couples will increase from $ 31,196 to $31,789 and for singles from $18,488 to $18,839. For families the additional amount of threshold for each dependent child will also be increased to $2,919 from $2,865.
Medicare expenses rebate threshold
From 1 of July 2010 the 20% tax offset on net medical expenses threshold amount has been increased from $1,500 to $2,000.
Deductions disallowed for claims against all government assistance payments
From 1 July 2011 individuals who receive Youth Allowance Education expenses will not be able to claim income tax deductions in relation to the payments received, however students will still be eligible to claim deductions for expenses incurred in gaining their payment for the 2010-11 year.
The discount on HECS & HELP reduced
The discount on HECS up-front payments is 20% from 1 of January 2012 this will be reduced to 10% and the bonus on voluntary payments of $500 or more will be reduced from 10% to 5%.