Household Assistance Package - tax changes for individuals

The Australian Government implemented the Household Assistance Package to help low and middle income families under its Clean Energy Future initiative.

For information about the: Household Assistance Package including eligibility, payments and additional assistance with the Low income supplement, visit www.australia.gov.au/householdassistance Clean Energy Future initiative, visit www.cleanenergyfuture.gov.au

Do the changes affect how you complete your 2011-12 tax return?

The changes will not affect how you complete your 2011-12 tax return. However, the changes are effective from 1 July 2012 so they will affect how you complete your 2012-13 tax return.

What changes came into effect on 1 July 2012?

From 1 July 2012, the government is delivering tax cuts to help low and middle income households with the expected rise in the cost of living while moving to a Clean Energy Future. As part of this you may notice a reduction in the amount of tax withheld from your pay.

Under these tax reforms:

• The tax-free threshold increases from $6,000 to $18,200. This means if you earn less than $18,200 per year you do not need to pay income tax, or if you earn more then $18,200 per year you will only pay income tax on earnings over $18,200.
• The personal tax rate increases from 15% to 19% applying to earnings that exceed $18,200 but not $37,000. The second marginal tax rate increases from 30% to 32.5% applying to earnings that exceed $37,000 but not $80,000
• If you have a taxable income below $80,000, you will receive a tax cut.
• The maximum value of the low-income tax offset (LITO) reduces from $1,500 to $445, with the reduction rate being decreased to 1.5 cents for each dollar of taxable income over $37,000. No offset will be available if your income exceeds $66,667.
• The pensioner tax offset merges with the more generous Senior Australians tax offset to form the new seniors and pensioners tax offset (SAPTO).
• There have been some changes to the Medicare levy and Medicare levy surcharge thresholds. These changes raise the low-income threshold and phase-in limits to ensure individuals do not have a Medicare levy debt if they have no income tax liability on their taxable income.

How may this affect you?

Depending on your individual circumstances, you may notice an increase in your pay due to a reduction in the amount of tax withheld. This is because of changes to the tax-free threshold and personal tax rates.

What if you have income from more than one source or paid by two or more employers at the same time?

If you are certain your total income for the year will be less than $18,200, then you can claim the tax-free threshold from each payer.

For more information, refer to When you have income from two payers.

How do you know if you need to lodge a tax return for the 2012-13 income year?

Not everyone is required to lodge a tax return every year. You need to lodge a tax return if your payment summary shows that you have had tax withheld or you have paid tax under the PAYG instalment system.

If you are unsure if you need to lodge a tax return: refer to Do you need to lodge a tax return for 2012-13? phone us on 13 28 61. We encourage those in the community who are not required to lodge to complete a Non-lodgment advice form.

More information

For more information, phone us during business hours on:

• 13 28 66 for business enquires
• 13 28 61 for personal enquiries.

For more information about:

• the Household Assistance Package, visit www.australia.gov.au/householdassistance
• the Clean Energy Legislative Package, visit www.cleanenergyfuture.gov.au
• our role in implementing, visit www.ato.gov.au/cleanenergyfuture
• the tax changes for employers, refer to Household Assistance Package - tax changes for employers.

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• website by visiting www.ato.gov.au
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