Changes to individual tax rates:
As we all know, individuals in Australia are taxed using a marginal tax system, whereby the more money one earn, the greater percentage of tax they pay. Whilst this may seem unfair to those willing to work hard and strive for success, there are much larger issues with our taxation system, such as the abundance of welfare to those not working (by choice).
For the 2016 financial year, tax rates were as follows:
| 0 – $18,200 | Nil |
| $18,201 – $37,000 | 19c for each $1 over $18,200 |
| $37,001 – $80,000 | $3,572 plus 32.5c for each $1 over $37,000 |
| $80,001 – $180,000 | $17,547 plus 37c for each $1 over $80,000 |
| $180,001 and over | $54,547 plus 45c for each $1 over $180,000 |
The changes to the 2017 are not significant, however the 32.5 % tax bracket will now have a ceiling of $87,000 as opposed to $80,000. This in effect will reduce the tax paid by middle income earners and high income earners (high income earners will receive a smaller portion of tax savings in comparison to their overall tax)(your local South Yarra Accountant can assist you in calculating differences).
Updated tax rates are as follows:
The following rates for 2016–17 apply from 1 July 2016.
| 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 |
Other changes include the increase in Medicare levy thresholds for singles, families and single pensioners/seniors.
The rate of the Medicare levy will remain at 2% however the threshold will be increased to the following:
-Singles $21,655
-Family’s $36,541 plus $3,356 for each dependent child or student
-Single seniors and pensioners $34,244
-Family threshold for seniors and pensioners $47, 670 plus $3,356 for each dependent child or student.
Whilst not major changes, there will still be differences to your tax return this financial year. If you are unsure as to how the changes will affect you, please visit your local Melbourne accounting firm for clarification.
