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Proposed new income tax rates

(10 Jul 2011) - The Federal Government has finally released its Clean Energy Future reforms which include a mechanism for pricing carbon plus a range of support measures to cushion the initial blow on consumers. Full details are available in the 158-page report but the key change for working Australians will be the income tax cuts which are phased in from the 2012-13 financial year.

The three main changes are (i) a lift in the tax-free threshold, (ii) an increase in the lowest two marginal tax rates, and (iii) a decrease in both the dollar value and withdrawal rate of the low income tax offset. The net impact of these measures is to increase the effective tax-free threshold by nearly $5,000 over the course of the next five years.

Proposed Personal Income Tax Rates (%)
Threshold $	From 1-Jul-2011		Threshold $	From 1-Jul-2012				Threshold $	From 1-Jul-2015
6,001	15		18,201	19				19,401	19
37,001	30		37,001	32.5				37,001	33
80,001	37		80,001	37				80,001	37
180,001	45		180,001	45				180,001	45
Effective tax-free threshold $16,000.			Effective tax-free threshold $20,542.					Effective tax-free threshold $20,979.
Low income tax offset is $1,500. Withdrawal rate is 4% from $30,000.			Low income tax offset is $445. Withdrawal rate is 1.5% from $37,000.					Low income tax offset is $300. Withdrawal rate is 1% from $37,000.

Warning: While all care has been taken in the preparation of this document (using sources believed to be reliable and accurate), we do not accept responsibility for any loss suffered by any person arising from reliance on this information. This document is not financial product advice and does not take into account any individual's objectives, financial situation or needs.