Household Assistance Package Tax Reforms

The Tax Office has released a suite of fact sheets relating to the tax changes arising from the Government’s Household Assistance Package for low and middle income families under the Clean Energy Future initiative.

Household Assistance Package – tax reforms

This Tax Office factsheet provides detailed information on the tax changes that will apply to Australian tax residents from 1 July 2012.

Phase one

The changes in phase one start on 1 July 2012 and apply to 2012-13, 2013-14 and 2014-15. The phase one changes are as follows:

  • the tax-free threshold increases from $6,000 to $18,200
  • the maximum value of the low-income tax offset (LITO) reduces from $1,500 to $445
  • the LITO of $445 will be reduced by 1.5 cents for each dollar of taxable income over $37,000
  • the pensioner tax offset and the senior Australians tax offset are combined to form the new seniors and pensioners tax offset (SAPTO), and
  • the Medicare levy and Medicare levy surcharge thresholds are raised – refer to One-off opportunity to extend private health insurance rebate ends soon!
Phase two

The changes in phase two start from 1 July 2015:

  • the tax-free threshold increases from $18,200 to $19,400, and
  • the LITO decreases from $445 to $300.

The factsheet can be accessed here.

Household Assistance Package – tax changes: information for individuals

The Tax Office factsheet provides the following information for individuals, including the details listed under ‘Phase one’ above. The factsheet also advises the following:

  • the changes will not impact an individual taxpayer’s 2011-12 tax return
  • due to the changes, a taxpayer may notice an increase in their pay due to a reduction in the amount of tax withheld, and
  • in relation to whether a taxpayer needs to lodge a tax return for 2012-13 – not everyone is required to lodge a tax return every year but if the payment summary shows that tax has been withheld or tax has been paid under the PAYG instalment system, the taxpayer is required to lodge a return.

The factsheet can be accessed here.

Household Assistance Package – tax changes: information for employers

The Tax Office factsheet provides the following information for employers, effective 1 July 2012:

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  • an employer will need to use updated tax tables to ensure that they withhold the correct amount
  • employees who claim the tax-free threshold and who earn less than $80,000pa will have less tax withheld from their pay, and
  • employees who do not claim the tax-free threshold will have more tax withheld from their pay.

The factsheet also provides information on accessing the updated 2012-13 tax tables and tax withheld calculator.

The factsheet can be accessed here.

by taxpayer.com.au

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