From 1 July 2012, the Government is delivering tax cuts to low and middle-income individuals by increasing the tax-free threshold and adjusting the first two marginal tax rates over two phases.

Phase 1 tax cuts

From 1 July 2012, the tax-free threshold will rise from $6,000 to $18,200, and the maximum value of the Low-income tax offset (LITO) will be reduced from $1,500 to $445.

The first marginal tax rate will be increased from 15 per cent to 19 per cent, and will apply to that part of taxable income that exceeds $18,200 but does not exceed $37,000.

The second marginal tax rate will be increased from 30 per cent to 32.5 per cent, and will apply to that part of taxable income that exceeds $37,000 but does not exceed $80,000.

Phase 2 tax cuts

From 1 July 2015, the tax-free threshold will rise from $18,200 to $19,400, and the LITO will be reduced from $445 to $300.

The second marginal tax rate will increase from 32.5 per cent to 33 per cent and will apply to that part of taxable income that exceeds $37,000 but does not exceed $80,000.

For those who were eligible for The Clean Energy Advance payment (CEA) should have received up to $250.

  • Pensioners up to $250 for singles and up to $190 for each eligible member of a couple
  • Eligible self-funded retirees who hold a Commonwealth Seniors Health Card and receive the Seniors Supplement up to $250 for singles and up to $190 for each eligible member of a couple

Pensioners and self funded retirees who are taxpayers and have taxable income of less than $80 000 a year, may also be eligible for a tax cut from 1 July 2013.
 
For a copy of WLM’s ‘Tax Matters’ please drop us an email and this will be sent to you.