Explanatory Memorandum
(Circulated by authority of the Treasurer, the Hon Jim Chalmers MP)General outline and financial impact
The amendments made by the Cost of Living Tax Cuts Bill and the Medicare Levy Bill deliver cost-of-living relief to all Australian taxpayers. They will deliver tax cuts for all taxpayers and ensure the Medicare Levy is imposed at higher thresholds for Australian taxpayers to help ease cost of living pressures.
Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024
Outline
Schedule 1 to Cost of Living Tax Cuts Bill amends the income tax law to modify income tax rate thresholds and tax rates for individuals for the 2024-25 and later income years.
Date of effect
Schedule 1 to Cost of Living Tax Cuts Bill commences on the first 1 January, 1 April, 1 July or 1 October to occur after the day Cost of Living Tax Cuts Bill receives Royal Assent. The amendments apply from the 2024-25 income year.
Proposal announced
Schedule 1 to Cost of Living Tax Cuts Bill was announced on 25 January 2024.
Financial impact
This measure is estimated to decrease tax receipts by $1.3 billion over the forward estimates period comprising:
| 2023-24 | 2024-25 | 2025-26 | 2026-27 | 2027-28 |
| - | 1.3 | -1.6 | -0.9 | 0.0 |
All figures in this table represent amounts in $ billions.
Human rights implications
Schedule 1 to Cost of Living Tax Cuts Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 3.
Compliance cost impact
This measure is expected to have only a minor regulatory impact.
Treasury Laws Amendment (Cost of Living-Medicare Levy) Bill 2024
Outline
The Medicare Levy Bill amends the Medicare Levy Act 1986 and the A New Tax System (Medicare Levy Surcharge - Fringe Benefits) Act 1999 to increase:
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- the Medicare levy low-income thresholds for individuals and families (along with the dependent child/student component of the family threshold) in line with movements in the CPI;
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- the Medicare levy low-income thresholds for individuals and families eligible for SAPTO (along with the dependent child/student component of the family threshold), in line with movements in the CPI; and
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- the surcharge low-income threshold in line with movements in the CPI.
Date of effect
This measure applies to the 2023-24 income year and later income years.
Proposal announced
Schedule 1 to the Medicare Levy Bill implements the increasing the Medicare levy low-income thresholds measure announced on Thursday, 25 January 2024.
Financial impact
Schedule 1 to the Medicare Levy Bill is estimated to decrease tax receipts by $640 million over the five years to 2026-27 and was provisioned for in the 2023-24 Mid-Year Economic and Fiscal Outlook:
| 2022-23 | 2023-24 | 2024-25 | 2025-26 | 2026-27 |
| - | - | -240.0 | -200.0 | -200.0 |
All figures in this table represent amounts in $ millions.
Human rights implications
Schedule 1 to the Medicare Levy Bill does not raise any human rights issues. See Statement of Compatibility with Human Rights - Chapter 3.
Compliance cost impact
This measure is expected to have a low impact on compliance costs.