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Home  »  Federal Budget 2017-18  »  Individuals

INDIVIDUALS

Medicare levy increase
Medicare levy low-income thresholds increase
HELP debt repayments
Family Tax Benefits Part A ​

MEDICARE LEVY INCREASE

What is the proposed measure?

The Medicare levy will increase from 2% to 2.5%.

Who will it affect?
Individuals with taxable income that exceed the relevant threshold

When will it apply?
From 2019-20

Comment:

The Medicare levy will increase by 0.5% to ensure that the National Disability Insurance Scheme (NDIS) is fully funded.

Other tax rates that incorporate the top personal tax rate, such as the FBT rate, will also increase.

The increase in the Medicare levy will reduce the benefits that arose for some taxpayers with last year’s tax cuts for individuals with taxable incomes exceeding $80,000

MEDICARE LEVY LOW-INCOME THRESHOLDS INCREASE

What is the proposed measure?
The Medicare Levy low-income thresholds will increase.

  Current Threshold 
 Proposed Threshold
 Single  $21,335  $21,665
 Family  $36,001  $21,655
 Single seniors and pensioners
 $33,738  $34,244
 Seniors and pensioners family
 $49,966  $47,670 (plus $3,356 for each dependent child)


Who will it affect?

Individuals taxpayers with taxable incomes at or below the new thresholds

When will it apply?
From 2018-19

Comment:

The increase in the low-income thresholds will provide some relief for lower income earners from the across-the-board 0.5% increase to the Medicare levy that will commence in 2019-20. Ideally, the Government will increase the thresholds in line with economic growth or wage growth so that affected taxpayers are not disadvantaged over the years.

 

HELP DEBT REPAYMENTS

What is the proposed measure?

The Higher Education Loan Program (HELP) debt repayment thresholds and rates will change.

Key changes are:

   Current (2017-18)
 Proposed (2018-19)
 Minimum repayment threshold (taxable income)
 $55,874  $42,000
 Minimum repayment rate (applies to minimum repayment threshold)
 4%  1%
 Maximum repayment rate
 8% (from $107,214)  
 9.5% (from $100,655) 

From 1 July 2019, the indexation of HELP repayment thresholds, currently linked to Average Weekly Earnings (AWE), will be changed to align to the Consumer Price Index (CPI).

Who will it affect?

Individual taxpayers with a HELP debt.


When will it apply?

  • New thresholds and rates – from 2018-19.
  • Indexation of HELP repayment thresholds to CPI – from 2019-20.


Comment:

This measure is part of the Government’s Higher Education Reform Package.

Overall, the proposal to reduce repayment thresholds by almost $14,000 will not be welcomed by current university students, high school students who aim to study at university, and former students who are still bearing a HELP debt.

The reduction of the minimum repayment rate from 4% to 1% will not offer sufficient relief from the change in thresholds.


FAMILY TAX BENEFITS PART A

What is the proposed measure?

The Government will reduce Family Tax Benefit (FTB) Part A supplement payments by $28 per fortnight for each child who does not meet the Government immunisation requirements.

The Government will also implement a consistent 30 cents in the dollar income test taper for FTB Part A families with a household income in excess of the Higher Income Free Area (currently $94,316).

Who will it affect?

Families that receive the FTB Part A.

When will it apply?

  • FTB Part A supplement payments – from 2017-18.
  • FTB Part A income test taper – from 2018-19.


Comment:

The FTB Part A supplement payment announcement is aimed at discouraging parents from not immunising their children.

The income test taper proposal ensures that higher income families are subject to the same income test taper rates.








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Federal Budget 2017-18
  • Editorial
  • Overview
  • Economic Outlook
  • Individuals
  • Housing
  • Business
  • Superannuation
  • GST
  • Tax Administration


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