Tax Rates 2016-2017 Year (Residents)
The 2017 financial year starts on 1 July 2016 and ends on 30 June 2017. The financial year for tax purposes for individuals starts on 1st July and ends on 30 June of the following year.
Personal Tax Rates 2016-17
Tax scale 2016-17
|Taxable Income||Tax On This Income (New Rates)|
|0 to $18,200||Nil|
|$18,201 to $37,000||19c for each $1 over $18,200|
|$37,001 to $87,000*||$3,572 plus 32.5c for each $1 over $37,000|
|* $87,001 to $180,000||$19,822 plus 37c for each $1 over $87,000|
|$180,001 and over||$54,232 plus 47c for each $1 over $180,000|
Tax scale (before amendment)
The 2016 Budget contained a proposal to expand the 32.5 cent band from $80,000 to $87,000. The amending legislation has been passed by parliament and is reflected in the table above. The table below shows the tax scale as it was before amendment to expand the 32.5 cent band
|Taxable Income||Tax On This Income as it was before amendment|
|0 to $18,200||Nil|
|$18,201 to $37,000||19c for each $1 over $18,200|
|$37,001 to $80,000||$3,572 plus 32.5c for each $1 over $37,000|
|$80,001 to $180,000||$17,547 plus 37c for each $1 over $80,000|
|$180,001 and over||$54,547 plus 47c for each $1 over $180,000|
Levy on higher income earners
A Federal Budget 2014-15 measure applied a Temporary Budget Repair Levy of 2% to taxable incomes in excess $180,000, to take effect for 3 years from 1 July 2014 until 30 June 2017. This in effect increases the highest marginal tax rate in the table above from 45% to 47% (before Medicare).
The above tables do not include Medicare Levy or the effect of any Low Income Tax Offset (“LITO”). Medicare Levy is applied on a progressive basis if eligible private health insurance cover is not maintained. There are low income and other full or partial Medicare exemptions available. A Medicare Levy Surcharge may also be applicable.
What’s new in 2016-17?
Here’s a list (not exhaustive) of some significant tax changes applying (unless otherwise indicated) from 1 July 2016:
Super contribution caps – concessional caps remain the same as previous year – the concessional cap is $35,000 for anyone aged 49 years or more immediately before (i.e. on 30 June) the beginning of the previous financial year. Otherwise the cap is $30,000. Non-concessional CGT cap has been indexed as per existing law. (Note however, a number of very significant changes apply from 1 July 2017.) See further – superannuation caps.
A range of innovation tax incentives have been announced, including non-refundable tax offsets of 20% and 10% on investments in Early Stage businesses, and Early Stage Venture Capital Limited Partnerships respectively, with an intended commencement date of 1 July 2016. See policy announcement and innovation incentives.
Backpacker tax and departing super payments
The so-called “backpacker tax” was originally intended to apply from 1 July 2016 and subsequently pushed back to 1 January 2017 together with a review.
[Backpacker Tax update 2 December 2016] From 1 January 2017, temporary working holiday makers will be taxed at a the rate of 15% for incomes up to $37,000. Over $37,000 the normal non-resident tax rates (starting at 32.5%) apply. The Employer registration deadline was extended to 31 January 2017, and employers will need to issue separate payment summaries (group certificates) for periods before and commencing 1 January 2017.
In the same bundle of measures, the application charge for working holiday maker visas will also be reduced by $50 to $390, however from 1 July 2017 the rate of tax on the Departing Australia Superannuation Payment (DASP) goes up to 65%. The departure tax (Passenger Movement Charge) is also up by $5.
Overseas graduates HECS HELP payments
Extension of HECS-HELP repayments to graduates living overseas: Australian graduates living overseas will be brought into the HECS-HELP repayment arrangements based on income (above the HELP/TLS income thresholds) in the 2016-17 tax year. See more here.
The HECS-HELP Benefit incentives for graduates in the fields of early childhood education, maths, science, education and nursing will no longer be available after 2016-17. A maximum of 2 years is allowed to lodge applications, with no late applications being accepted. See more here.
The voluntary and upfront HECS-HELP payments bonuses will no longer be available after 1 January 2017. See more here.
Fringe benefits calculation for the purposes of income tests for family assistance, Medicare levy surcharge and certain other offsets has been changed. This takes effect from 1 January 2017 for family assistance payments and for income tax tests from 1 July 2017. See Budget Savings (Omnibus) Act 2016 (Schedule 15)
Managed Investment Trusts are subject to a new regime commencing 1 July 2016.
Changes applicable from 1 July 2016 include:
- Small business owners are able change the legal structure of their business without incurring a CGT liability. See details of amending legislation here and further on small business concessions generally.
- The small business aggregated turnover test threshold which is used for determining access to a number of small business concessions has been raised from $2 million to $10 million. The measures exclude the CGT concessions (which remains at $2 million) and small business tax offset (increased to $5 million). See small business concessions.
- Company tax rate reduction for small businesses and a resulting franking credit reduction also apply from 1 July 2016. See: Company tax rates
- Individuals small business tax offset increases to 8% from 1 July 2016 along with the aggregated annual turnover test being increased to $5 million (previously $2 million). The tax offset is still capped at $1,000.
- Intangible assets effective life can be self-assessed from 1 July 2016, or otherwise continue using existing statutory lives. See depreciation and Treasury Laws Amendment (2017 Enterprise Incentives No. 1) Bill 2017
- R&D tax offsets rates have been reduced by 1.5% for the first $100 million of eligible expenditure – see R&D Tax Concessions
Farm Management Deposits scheme has a series of amendments applying from 1 July 2016, including an increase in maximum deposit (to $800,000), softening of withdrawal conditions for drought-affected farmers, allowing bank account offsets, and allowing re-entry to income averaging after 10 years. See more here and here.
Capital gains withholdings/clearance on disposal of real property by foreign residents
Foreign resident capital gains tax withholding requirements apply to foreign resident vendors of taxable Australian property under contracts entered into from 1 July 2016.
The obligation is placed on purchasers to collect and remit the tax. Other features of the scheme:
- The requirements apply where the contract price is $2 million or more
- The withholding tax rate is 10% – to be withheld at settlement.
- The tax is non-final – which enables the vendor to claim the credit when lodging an Australian tax return.
The system also provides for a clearance certificate process to enable tax-resident vendors to avoid the withholding, or for variation of the rate.
See further – CGT and non-residents
Main residence exemption – non-residents
Under a 2017 Budget proposal, foreign and temporary tax residents will be denied access to the CGT main residence exemption from 7:30PM (AEST) on 9 May 2017. Existing properties held prior to this date will be grandfathered until 30 June 2019
This page was last modified on 23 Aug 2017