Newsletter
Federal Budget Newsletter
PERSONAL TAXATION
2% deficit levy for three years from 1 July 2014 on incomes over $180,000
The Treasurer announced the introduction of a Budget deficit levy (ie tax), which will apply for three years from 1 July 2014. This temporary levy will apply at 2% for incomes over $180,000 (ie 2% on taxable income in excess of $180,000).
Example: An individual with a taxable income of $200,000 will pay 2% of $20,000, ie a levy of $400.
The new levy is expected to affect a relatively small number of people (around 400,000 taxpayers). When taking into account this new levy and the Medicare levy (which is already legislated to increase from 1.5% to 2% from 1 July 2014), the top marginal tax rate will be 49% from 1 July 2014 to 30 June 2017.
As a result of the new deficit levy, the government will also increase the FBT rate (see Business Taxation).
Medicare levy thresholds for families increased for 2013–2014
From 2013–2014, the Medicare levy low-income threshold for families will be increased to $34,367 (up from $33,693 for 2012–2013). The additional amount of threshold for each dependent child or student will also be increased to $3,156 for 2013–2014 (up from $3,094).
The low-income threshold for individuals will remain at $20,542 for 2013–2014 (unchanged from 2012–2013). Likewise, the low-income threshold for senior Australians will remain at $32,279 for 2013–2014 (unchanged from 2012–2013). This threshold applies to those entitled to the seniors and pensioners tax offset (SAPTO).
Several tax offsets to be abolished
The Treasurer announced that the following tax offsets will be abolished from 1 July 2014:
- Nearly all of the dependant tax offsets, including the dependent spouse tax offset, for all taxpayers; and
- The mature age worker tax offset, which will effectively be replaced by new incentives to employ older works (see Other Changes).