Household Assistance Package - tax reforms
Household Assistance Package - tax reforms
Introduction
The Australian Government has implemented the Household Assistance Package to help low and middle income families under its Clean Energy Future initiative.
Government payments made under the package are tax-free, including Clean Energy supplement payments made under any of the following:
- ABSTUDY scheme
- Veterans' Children Education Scheme
- Military Rehabilitation and Compensation Act Education and Training Scheme
- Transitional farm family payment
- Exceptional circumstances relief payment.
Payments started in May 2012. From March 2013, ongoing assistance will be paid through increases to regular government entitlements.
We are responsible for the administration of the tax reform measures, which are effective from 1 July 2012.
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For more information about tax changes and how they affect you, refer to:
For more information about the:
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From 1 July 2012, the tax changes introduced as part of the Household Assistance Package apply to an Australian resident for tax purposes.
Personal income tax rates for a foreign resident (non-resident) for tax purposes are aligned with the tax changes applying to resident taxpayers.
The following changes started on 1 July 2012 and apply to the following income years:
Tax-free threshold
The tax-free threshold increased from $6,000 to $18,200. This means you will not pay income tax if your taxable income is $18,200 or less.
If you are certain your total income for the year will be less than $18,200, you can claim the tax-free threshold from each payer.
Low-income tax offset
The low-income tax offset (LITO) reduces the tax payable by low income earners. You are not eligible for the LITO if your income is over $66,667.
Changes to the LITO are:
- The maximum value of the LITO reduced from $1,500 to $445.
- The LITO of $445 is reduced by 1.5 cents for each dollar of taxable income over $37,000.
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The combined effect of the increased tax-free threshold and the reduced LITO is that individuals with taxable incomes up to $20,542 will not pay income tax.
Individuals with a taxable income of less than $80,000 will receive a tax cut. Most will receive a tax cut of around $300 a year. For the changes in tax rates, see Updated tax rates.
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Seniors and pensioners tax offset
The pensioner tax offset merges with the more generous senior Australians tax offset (SATO) to form the new seniors and pensioners tax offset (SAPTO).
The offset can reduce the amount of tax you are liable to pay.
Medicare levy and Medicare levy surcharge
There have been some changes to the Medicare levy and Medicare levy surcharge thresholds, which raise the low-income threshold and phase-in limits to ensure individuals who do not have to pay income tax also do not have Medicare levy.
The following changes start from 1 July 2015:
- The tax-free threshold increases from $18,200 to $19,400.
- The low-income tax offset (LITO) decreases from $445 to $300.
For the changes in tax rates, see Updated tax rates.
For the changes to LITO, see Low-income tax offset.
Updated tax rates
The tables below provide resident and non-resident tax rates for:
- 2012-13, 2013-14 and 2014-15 (which apply from 1 July 2012)
- 2015-16 (which apply from 1 July 2015).
Table 1: Resident tax rates for 2012-13, 2013-14 and 2014-15
Taxable income
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Tax on this income
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0 - $18,200
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Nil
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$18,201 - $37,000
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19c for each $1 over $18,200
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$37,001 - $80,000
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$3,572 plus 32.5c for each $1 over $37,000
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$80,001 - $180,000
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$17,547 plus 37c for each $1 over $80,000
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$180,001 and over
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$54,547 plus 45c for each $1 over $180,000
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Table 2: Non-resident tax rates for 2012-13, 2013-14 and 2014-15
Taxable income
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Tax on this income
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0 to $80,000
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32.5c for each $1
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$80,001 to $180,000
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$26,000 plus 37c for each $1 over $80,000
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$180,001 and over
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$63,000 plus 45c for each $1 over $180,000
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Table 3: Resident tax rates for 2015-16
Taxable income
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Tax on this income
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0 - $19,400
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Nil
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$19,401 - $37,000
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19c for each $1 over $19,400
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$37,001 - $80,000
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$3,344 plus 33c for each $1 over $37,000
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$80,001 - $180,000
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$17,534 plus 37c for each $1 over $80,000
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$180,001 and over
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$54,534 plus 45c for each $1 over $180,000
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Table 4: Non-resident tax rates for 2015-16
Taxable income
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Tax on this income
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0 to $80,000
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33c for each $1
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$80,001 to $180,000
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$26,400 plus 37c for each $1 over $80,000
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$180,001 and over
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$63,400 plus 45C for each $1 over $180,000
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For more information about tax changes and how they affect you, refer to:
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Low-income tax offset
From 1 July 2012, the LITO threshold will increase from $30,000 to $37,000. You are entitled to receive the offset if your taxable income is below $66,667. The maximum value of $445 begins to be phased out at the reduced rate of 1.5 cents for each dollar of taxable income over $37,000.
From 2015-16, the maximum value of the LITO will be reduced to $300 on taxable income under $37,000. The maximum value of $300 then begins to be reduced by one cent for each dollar of taxable income over $37,000 but up to the increased threshold limit of $67,000.
Table 5: Low-income tax offset (LITO)
Financial years
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2011-12
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2012-13
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2015-16
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LITO amount
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$1,500
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$445
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$300
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Taxable income the LITO begins to be reduced at
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$30,000
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$37,000
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$37,000
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You are no longer eligible for LITO if you taxable income is
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$67,500 and over
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$66,667 and over
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$67,000 and over
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Withdrawal rate
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4%
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1.5%
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1.0%
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Seniors and pensioners tax offsets
From 1 July 2012, the pensioner tax offset will merge with the SATO, to be known as SAPTO.
Table 6: Rebate income thresholds
SAPTO
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2012 - 13
Rebate income
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Eligibility condition
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Threshold max tax offset applies
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Above threshold no longer eligible
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Maximum tax offset
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You did not have a spouse and your rebate income was less than
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$32,279
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$50,119
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$2,230
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You had a spouse and the combined rebate income of you and your spouse was less than
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$57,948
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$83,580
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$1,602
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At any time during the year you and your spouse had to live apart due to illness or because one of you was in a nursing home and the combined rebate income of you and your spouse was less than
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$62,558
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$95,198
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$2,040
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No change to the maximum tax offset values or the reduction rate 12.5 cents applied for every $1 over the maximum rate threshold up to the cut off threshold.
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To work out your eligibility for a pensioner tax offset or a SATO for this tax time (financial year 2011-12), you can continue to use the current senior Australians and pensioners tax offset calculator.
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For more information about the pensioner tax offset, SATO and the SAPTO, refer to Guide to tax offsets.
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Medicare levy surcharge
From 1 July 2012, the Medicare levy surcharge (MLS) is income tested against the following income tier thresholds:
Table 7: Income tier thresholds for MLS
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Unchanged
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Tier 1
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Tier 2
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Tier 3
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Singles
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$0 - $84,000
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$84,001 - $97,000
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$97,001 - $130,000
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$130,001 and over
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Families*
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$0 - $168,000
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$168,001 - $194,000
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$194,001 - $260,000
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$260,001 and over
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Rates
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0%
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1%
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1.25%
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1.5%
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* The family income threshold is increased by $1,500 for every child after the first child.
If you earn under $84,000 as a single individual or $168,000 as a family, you do not pay the Medicare levy surcharge.
Reduction for people on low incomes
Thresholds and limits are being increased so that individuals who do not earn enough income to pay income tax do not have to pay Medicare levy. From 1 July 2012, the Medicare levy low-income thresholds change.
Table 8: Medicare levy income thresholds for individuals falling under the following categories
Financial year
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2010-11
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2011-12
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*2012-13
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Category
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Lower threshold
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Upper threshold
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Lower threshold
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Upper threshold
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Lower threshold
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Upper threshold
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If you are eligible for the SATO
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$30,685
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$36,100
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$30,685
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$36,100
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No longer applicable
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No longer applicable
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If you are eligible for the pensioner tax offset
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$30,439
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$35,810
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$30,451
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$35,824
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No longer applicable
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No longer applicable
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If you are eligible for the SAPTO
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Not applicable
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Not applicable
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Not applicable
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Not applicable
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$32,279
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$37,975
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All other taxpayers
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$18,839
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$22,163
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$19,404
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$22,828
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$20,542
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$24,167
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*Changes for 2012-13 were announced under the Clean Energy Future legislation, which received royal assent on 4 December 2011.
Table 9: Medicare levy income thresholds for families falling under the following categories
Financial year
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2010-11
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2011-12
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*2012-13
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Category
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Lower threshold
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Upper threshold
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Lower threshold
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Upper threshold
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Lower threshold
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Upper threshold
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Individuals with a spouse and/or dependants eligible for the SATO
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$44,500
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$52,352
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$44,500
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$52,352
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No longer applicable
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No longer applicable
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Individuals with a spouse and/or dependants eligible for the SAPTO
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Not applicable
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Not applicable
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Not applicable
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Not applicable
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$46,000
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$54,117
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Dependants not eligible for SAPTO
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$31,789
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$37,398
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$32,743
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$38,521
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$32,743
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$38,521
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Table 10: Extra income thresholds for each child
Extra income for each child
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Financial year
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Lower threshold
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Upper threshold
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2010-11
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$2,919
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$3,434
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2011-12
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$3,007
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$3,538
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2012-13
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*$3,007
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$3,538
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*Changes for 2012-13 were announced under the Clean Energy Future legislation, which received royal assent on 4 December 2011.
More information
For more information about the Household Assistance Package:
For more information about the Clean Energy Legislative Package, visit www.cleanenergyfuture.gov.au
For more information about our role, refer to Clean energy initiative - overview.
Last Modified: Thursday, 18 October 2012
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