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Targeted personal income tax relief

The Government has announced that from 1 July 2016, for individual taxpayers, the marginal tax rate of 37 per cent will start at $87,000 instead of the current $80,000.

To benefit from this change your taxable income must be more than $80,000.

The personal income tax relief changes take effect from 1 July 2016 and change the tax rates as follows (change in bold).

Updated tax rates for resident taxpayers
Taxable income Tax on this income
0 – $18,200 Nil
$18,201 – $37,000 19c for each $1 over $18,200
$37,001 – $87,000 $3,572 plus 32.5c for each $1 over $37,000
$87,001 – $180,000 $19,822 plus 37c for each $1 over $87,000
$180,001 and over $54,232 plus 45c for each $1 over $180,000

 

Updated tax rates for non-resident taxpayers
Taxable income Tax on this income
0 – $87,000 32.5c for each $1
$87,001 – $180,000 $28,275 plus 37c for each $1 over $87,000
$180,001 and over $62,685 plus 45c for each $1 over $180,000

The above rates do not include the Medicare levy or Temporary Budget Repair Levy.

 

For employees

The reduced amount of tax for the full year is shown below:

$80,000 or less

$0

$81,000

$45

$82,000

$90

$83,000

$135

$84,000

$180

$85,000

$225

$86,000

$270

$87,000 or more

$315

 

Example

Craig’s taxable income is $85,000.

With the increase in the threshold, Craig will pay $19,172 in income tax which is $225 less than he would have under the old threshold.

End of example

If you earn more than $80,000, from 1 October your employer will reduce the amount of tax being withheld from your pay.  You don’t have to do anything.  Any extra tax you have paid before the change in threshold is implemented will be credited to you when you lodge your 2017 income tax return.

For employers

New tax tables and payroll software updates will apply from 1 October 2016.

Contact your software provider for the relevant payroll software updates or download the latest tax table. The ATO Tax Withheld Calculator will also be updated to take effect from this date.

 

From: https://www.ato.gov.au/General/New-legislation/In-detail/Direct-taxes/Income-tax-for-individuals/Targeted-personal-income-tax-cut/