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 (11
May 2010) - A sharp rise in revenue over the
next three years is expected to lift the Federal
budget back into surplus within three years according
to Treasury projections released today. Although
the underlying deficit is likely to remain high
at around $40.7 billion during FY11, a strengthening
of the economic recovery is tipped to shrink the
deficit to $13.0 billion in FY12 and to produce
a small surplus in FY13.
Key measures announced in the Budget
50% discount on interest received from 1 July
2011
The Government has announced plans to provide
a 50% tax discount on up to $1,000 of interest
earned by individuals, including interest earned
on bonds, debentures and annuities. The discount
will be available for interest income earned directly
as well as indirectly, such as via a trust or
managed investment scheme, and is expected to
benefit around 5.7 million taxpayers in 2011-12.
At an interest rate of 6%, a taxpayer would need
savings of $16,667 to generate $1,000 of interest.
Personal tax cuts
Personal income tax rates for FY11 will see the
38% rate drop to 37% and the income threshold
on the 15% rate lifted to $37,000 per annum.
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Personal
income tax rates
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Current Rates
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From 1 July 2010
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Income $
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%
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Income $
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%
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0 - 6,000
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0
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0 - 6,000
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0
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6,001 - 35,000
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15
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6,001 - 37,000
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15
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35,001 - 80,000
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30
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37,001 - 80,000
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30
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80,001 - 150,000
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38
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80,001 - 180,000
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37
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180,000 +
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45
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180,000
+ |
45
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Low income tax offset
will be increased
The Government has announced that the low
income tax offset will be lifted from $1,350
to $1,500 and the upper income threshold
raised from $63,750 to $67,500.
Standard tax deduction introduced
From 1 July 2012, the Government plans to
introduce a standard deduction for work-related
expenses and the cost of managing tax affairs.
The standard deduction will be $500 for
FY13 and then increase to $1,000 for FY14
and subsequent years. The standard deduction
will not be compulsory so where a person’s
deductible expenses exceed the standard
amount, they will be able to claim these
higher expenses. Moreover, the standard
deduction will be available irrespective
of whether the expenditure was actually
incurred.
Medicare and medical expense changes
The Medicare levy low income threshold will
increase to $18,488 for individuals and
$31,196 for families. The additional amount
of threshold for each dependent child or
student will also increase to $2,865.
On the minus side, the net medical expenses
tax offset will be lifted from $1,500 to
$2,000 from 1 July 2010 and indexed to the
Consumer Price Index (CPI) on an annual
basis.
Superannuation Co-contribution less generous
There will be a permanent reduction in the
matching rate and maximum payable superannuation
co-contribution. The matching rate will
be 100% and the maximum co-contribution
payable on an individual’s eligible personal
non-concessional contribution will be $1,000.
Child Care Rebate capped
From 1 July 2010, the Child Care Rebate
will be capped at $7,500 per child from
the current annual cap of $7,778 per child
and indexation of the cap will be paused
for four years. from 1 July 2010. The out-of-pocket
reimbursement of child care expenses will
remain at 50 per cent up to the annual cap.
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