In July 2011, the federal government announced the introduction of a carbon tax on Australia’s biggest polluting companies. According to the government, more than half of the revenue raised from the carbon tax will be redirected to Australians in the form of tax cuts (for taxpayers) and a Clean Energy Supplement (for Age Pensioners and others). The tax cuts and supplement are designed to compensate Australians for the expected cost increases that will be passed onto consumers when the carbon tax is introduced from July 2012.
In the May 2012 Federal Budget, the Federal government announced further payments to taxpayers in the form of education bonuses, increases in family payments and other payments which are to be funded by not reducing the company tax rate as initially promised.
The tax rates applicable for the 2012/2013 year are set out below. We have included the tax rates for the 2012 year (including the low-income threshold for the Medicare levy announced in the May 2012 Federal budget) at the end of the article, for your reference and convenience.
Note: If you’re Age Pension age or older, you may be eligible for a higher tax-free threshold by taking advantage of the Senior Australians Tax Offset (SATO). Refer to other SuperGuide articles for more information on SATO.
Note: The primary source for taxpayers on any information relating to tax rates is the Australian Taxation Office website (www.ato.gov.au). SuperGuide doesn’t answer questions specifically on the income tax rates.
Income tax rates from 2012/2013 financial year
From the 2012/2013 year, the tax-free threshold jumps to the first $18,200 of your income. You will be able to earn up to $20,542 (from the 2012/2013 year) before any income tax is payable, when taking into account the Low Income Tax Offset (LITO). From the 2012/2013 year, your top tax rate can be expected to be 0%, 19%, 32.5%, 37% or 45% (plus Medicare levy).
|Threshold $||Marginal rate||Threshold $||Marginal rate|
|LITO||Up to $445||1.5% withdrawal rate on income over $37,000||Up to $300||1% withdrawal rate on income over $37,000|
|Effective tax-free threshold*||20,542||20,979|
Source: Adapted from the Office of the Deputy Prime Minister and Treasurer 2011, Joint media release with Prime Minister (No .081) 10 July 2011, ‘Combining tax cuts with significant tax reform’, *Includes the effect of the tax-free threshold and the low income tax offset (LITO)
Income tax rates for 2011/2012 financial year
For the 2011/2012 year, you can expect a tax-free threshold on the first $6000 of your income, and you can earn up to $16,000 (for the 2011/2012 year) without paying income tax when taking into account the Low Income Tax Offset (LITO). For the 2011/2012 year, your top marginal tax rate can be 0%, 15%, 30%, 37% or 45% (plus Medicare levy).
|Income tax rates for 2011/2012 financial year|
|Income||Marginal tax rate||Tax payable|
|$6,001- $37,000||15%||15 cents for each $1 over $6,000|
|$37,001-$80,000||30%||$4,650 plus 30 cents for each dollar over $37,000|
|$80,001-$180,000||37%||$17,550 plus 37 cents for each dollar over $80,000|
|$180,001 and above||45%||$54,550 plus 45 cents for each dollar over $180,000|
Source: Adapted from information on the ATO website (www.ato.gov.au). Maximum LITO payable is $1500 up to taxable income of $16,000.
Note: For the 2011/2012 year only, if your taxable income is more than $50,000 then your income will also be subject to a flood levy. The flood levy is set out in the table below.
|Taxable income||Flood levy (for 2011/2012 year) on this income|
|$0 to $50,000||Nil|
|$50,001 to $100,000||Half a cent for each $1 over $50,000|
|Over $100,000||$250 plus 1c for each $1 over $100,000|