News
Federal Budget 2008
Reports we prepare which value lost earnings will be affected by changes in the 2008 Federal Budget to income tax rates and thresholds, the Medicare Levy and the low income tax offset. Reports will now use the updated tax rates, Levy and offset. If you have a report which relates to a case which has not yet finalised, the estimates may be affected by these changes. Please contact us to discuss any particular case.
Income tax rates
Changes to personal income tax rates detailed in the 2008 Budget will be introduced over the following three years.
From 1/7/08 the 30% tax rate threshold will increase from $30,000 to $34,000, the 40% tax rate threshold will increase from $75,000 to $80,000, and the 45% threshold will increase from $150,000 to $180,000.
From 1/7/09 the 30% threshold will be increased to $35,000, and the 40% tax rate will be reduced to 38%.
From 1/7/10 the 30% tax rate threshold will be increased to $37,000, and the 38% tax rate will be reduced to 37%.
Income tax thresholds and rates are then:
| 2007-08 income tax thresholds and rates | |
|---|---|
| Start of band | Tax rate in band |
| 0 | 0.0% |
| 6,000 | 15.0% |
| 30,000 | 30.0% |
| 75,000 | 40.0% |
| 150,000 | 45.0% |
| 2008-09 income tax thresholds and rates | |
|---|---|
| Start of band | Tax rate in band |
| 0 | 0.0% |
| 6,000 | 15.0% |
| 34,000 | 30.0% |
| 80,000 | 40.0% |
| 180,000 | 45.0% |
| 2009-10 income tax thresholds and rates | |
|---|---|
| Start of band | Tax rate in band |
| 0 | 0.0% |
| 6,000 | 15.0% |
| 35,000 | 30.0% |
| 80,000 | 38.0% |
| 180,000 | 45.0% |
| 2010-11 income tax thresholds and rates | |
|---|---|
| Start of band | Tax rate in band |
| 0 | 0.0% |
| 6,000 | 15.0% |
| 37,000 | 30.0% |
| 80,000 | 37.0% |
| 180,000 | 45.0% |
Please note that the 2008 Budget originally proposed reducing the tax rate for income over $180,000 to 43% in 2009-10 and 42% in 2010-11; see the 2008 Budget website. However the Income Tax Rates Act 1986 indicates that this reduction was not enacted.
Medicare levy
The Medicare levy low-income threshold for singles increases from $16,740 in 2007-08 to $17,309 in 2008-09. The Medicare levy surcharge applies where an individual or family does not have private health insurance. In 2007-08 this was charged where income exceeded $50,000 for individuals or $75,000 for families. In 2008-09 these thresholds increase to $100,000 for individuals and $150,000 for families.
Low income tax offset
The low income tax offset will also be increased over the next three years. Currently, in the 2007-08 year, the maximum offset is $750. This will be increased to: $1,200 in 2008-09; $1,350 in 2009-10; and $1,500 in 2010-11.
After tax earnings
The table below illustrates the effect of these changes on after-tax weekly pay:
| Changes to net income | ||||
|---|---|---|---|---|
| Before tax earnings $pa gross |
Net earnings $pw, 2007-08 |
Net earnings $pw, 2008-09 |
Net earnings $pw, 2009-10 |
Net earnings $pw, 2010-11 |
| $30,000 | $511.7 | $520.3 | $523.2 | $526.1 |
| $40,000 | $635.3 | $655.4 | $661.2 | $669.8 |
| $50,000 | $759.9 | $779.0 | $784.8 | $793.4 |
| $60,000 | $891.1 | $902.6 | $908.4 | $917.0 |
| $70,000 | $1,022.4 | $1,033.9 | $1,036.8 | $1,042.5 |
| $80,000 | $1,144.1 | $1,165.2 | $1,168.1 | $1,173.8 |
| $90,000 | $1,256.2 | $1,277.3 | $1,284.0 | $1,291.7 |
| $100,000 | $1,368.3 | $1,389.4 | $1,400.0 | $1,409.5 |
| $125,000 | $1,648.6 | $1,669.7 | $1,689.8 | $1,704.2 |
| $150,000 | $1,928.9 | $1,950.0 | $1,979.7 | $1,998.8 |
| $175,000 | $2,185.2 | $2,230.3 | $2,269.5 | $2,293.5 |
| $200,000 | $2,441.5 | $2,491.4 | $2,532.6 | $2,557.5 |
These net weekly figures allow for income tax, the Medicare levy, using the low-income threshold for singles, and the low income tax offset. They do not allow for any other offsets or allowances.
Disclaimer
The information displayed or given on this website is of a general nature and does not take into account any person's objectives, financial situation or needs. Cumpston Sarjeant makes this material available on the understanding that users exercise their own skill and care with respect to its use. Before relying on the material, users should carefully evaluate the source, accuracy, currency, completeness and relevance for their purposes and should obtain appropriate professional advice relevant to their particular circumstances.