Australia: Other Budget Changes Effecting Individuals

Personal Tax Rates

The resident tax rates (excluding Medicare Levy) effective from 1 July 2009 are as follows:

Tax Rates 2009-10

These rates are the same as the previously announced changes.

Medicare Levy – Low Income Threshold

From 1 July 2009, the Medicare levy low-income threshold will increase to $17,794 (up from $17,309) for singles and to $30,025 (up from $29,207) for couples.

For families, the additional amount of threshold for each dependent child or student will also be increased to $2,757 (up from $2,682).

The Medicare levy low-income threshold for pensioners below Age Pension age will also be increased from $22,922 to $25,299.

Family Tax Benefits

Higher income thresholds for family payments will be paused at current levels for three years until July 2012. This will reduce the growth in family payments to those at the higher end of the income scale.

From 1 July 2009 for a period of three years:

• the Family Tax Benefit Part B primary earner income threshold will remain at $150,000;

• the income threshold for receiving dependency tax offsets will remain at $150,000;
• the Baby Bonus eligibility threshold will remain at $75,000 family income in the six months following the birth or adoption of a child (equivalent to $150,000 a year); and
• the higher income free area of Family Tax Benefit Part A will remain constant.

The Family Tax Benefit Part A lower income free threshold (currently $42,559) and the Family Tax Benefit Part B secondary earner income threshold (currently $4,526) will continue to be indexed annually in line with increases in the costs of living.

Private Health Insurance

From 1 July 2010, the Government will introduce three new 'Private Health Insurance Tiers' – so that higher income earners receive less 'carrot' and more 'stick' to be insured:

• Tier 1: for singles earning more than $75,001 (couples $150,001), the Private Health Insurance Rebate will be 20 per cent for those up to 65 years (25 per cent for those over 65, and 30 per cent for those over 70 years).
  Surcharge: Remains 1%
• Tier 2: for singles earning more than $90,001 (couples $180,001), the Private Health Insurance Rebate will be 10 per cent, for those up to 65 years (15 per cent for those over 65, and 20 per cent for those over 70 years).
  Surcharge: Increased to 1.25 per cent.
• Tier 3: for singles earning more than $120,001 (couples $240,001), no Private Health Insurance Rebate will be provided.
  Surcharge: Increased to 1.5 per cent.

All income thresholds would continue to remain indexed

Skilled Migration Levels Reduced

The Australian Government has further cut the permanent skilled migrant intake to 108,100 places for the 2009/10 Migration Program.

In March, the Government cut the 2008–09 permanent skilled migration intakes by 14 per cent from 133,500 to 115,000. This reduction to 108,100 places represents an overall drop of almost 20 per cent on previous planning levels.

In addition to the cutback in places, the Government will be increasing the English language level required for trades-related occupations and introduce a targeted skills-testing regime to ensure that migrants have both the language and skills needed to participate in the labour market.

Foreign Investment Funds

The Government will repeal the FIF provisions and replace them with a specific, narrowly-defined anti avoidance rule. Once more information regarding the draft legislation has been released, we will keep you informed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.