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By Mark Chapman, Tax Communications Director, H&R Block Australia
Each year about this time, the Federal Budget gives the government the opportunity to consider whether the amounts of tax which it raises (and the various ways in which it spends that money) are appropriate for the year ahead. This year, with a Federal Election looming, the Budget came at a particularly tricky time for the government.
Perhaps as a result, the number of tax measures announced which are likely to directly impact H&R Block customers were very limited indeed.
The most significant measure was an increase in the second highest tax threshold, the one which levies a rate of 37% on all taxable income between $80,001 and $180,000. The rate isn’t changing but the threshold is. From 1 July 2016, the rate of 37% will be charged on taxable incomes between $87,001 and $180,000.
If your taxable income is more than $80,000 per year, that means you’ll be getting a tax cut. In addition, if your taxable income is less than $80,000 but could tip over the $80,000 mark in future because of – for instance – pay rises, you can also look forward to a slightly lower tax bill in the future.
Incomes between $80,001 and $87,000 will from 1 July 2016 fall into the 32.5% tax bracket, instead of the 37% tax bracket.
If you currently earn $87,000 per year, your annual tax bill will fall by about $315 (or about $26 per month).
If you are a lower income earner, there were no changes to tax rates or thresholds. The tax free threshold remains at $18,200. This is the amount you can earn without having to pay income tax.
If you own a small business, there were a number of tax changes which could affect you. See Budget 2016: A budget for small business?
Calculate your estimated tax refund with our Tax refund calculator.
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