As the start of the financial year approaches there is always a raft of changes in taxes and thresholds that you need to be aware of or run the risk of falling foul of the rules and risk being penalised. This year there's the complication of the federal election, the outcome of which will affect some taxes and thresholds.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
1. Income tax cut
Government proposals in the May budget would help limit some of the income tax bracket creep for middle earners by increasing the upper end of the 32.5 per cent threshold from $80,000 to $87,000 from July 1. It is supported by Labor but may take several months to be legislated, in which case the tax cut would be back-dated to July 1 this year.
2. Minimum wage
The Fair Work Commission recently announced a 2.4 per cent increase to minimum wages. The increase will apply from July 1. The decision directly affects more than 1.86 million employees in Australia who are reliant upon minimum rates of pay, among which women are over-represented. The national minimum wage will be $672.70 per week, or $17.70 per hour.
3. Super salary sacrifice
The government said in the budget that the annual pre-tax, or concessional contributions caps, will fall from July 1, 2017 to $25,000. Currently, the caps are up to $30,000 into super for under 50s and $35,000 for over-50s. Although the change would not take effect until July 1, 2017 there is one last chance to maximise voluntary contributions. If the election is won by Labor, the thresholds will remain unchanged.
4. Government co-contribution
From July 1, the lower annual income threshold for the superannuation co-contribution scheme increases from $35,454 to $36,021. This is the scheme where if your income is under $36,021 and you contribute up to $1000 of after-tax income into your super account, the federal government will match each dollar you contribute with a payment of 50¢. The incentive reduces from income of $36,021 and ceases altogether at $51,021.
5. HECS-HELP
The minimum annual income threshold at which repayment of student debt must start will rise to $54,869 for 2016-17 from $54,126 this financial year. The percentage of student debt that must be repaid increases in income bands until $101,900 and above, when it is 8 per cent. The repayment is collected by the Tax Office through the individual's income tax assessment.
