FEDERAL BUDGET
Personal Taxation
50% Savings Discount for Interest Income
From 1 July 2011, the Government will provide individuals with a 50% tax discount on up to $1,000 earned on interest.
This includes interest earned on deposits held with any bank, building society or credit union as well as on bonds, debentures or annuity products.
The discount will be available for interest income earned directly as well as indirectly, such as via a trust or a managed investment scheme (MIS).
Adjusted taxable income
The Government states that taxpayers claiming the discount for interest income will have a reduced adjusted taxable income for the purpose of determining eligibility for transfer payments and other concessions.
This may result in some individuals and families becoming eligible for transfer payments or for a larger transfer payment.
The Government notes that the consequential expense primarily affects Family Tax Benefit, but will also affect other payments such as:
- the Baby Bonus;
- Child Care Benefit;
- the Education Tax Refund;
- the Commonwealth Seniors Health Card (CSHC); and
- the Pensioner Supplement (which is linked to eligibility for the CSHC).
- The measure will apply from 1 July 2011.
Standard Deduction for Work-related Expenses
The Government will provide individual taxpayers with a standard deduction of $500 for work-related expenses and for the cost of managing tax affairs from 1 July 2012.
The standard deduction will increase to $1,000 from 1 July 2013.
Those taxpayers with deductible expenses greater than the standard deduction amount will still be able to claim their higher expenses, in lieu of claiming the standard deduction amount.
The standard deduction will reduce individuals' and families' adjusted taxable income for the purpose of determining their eligibility for transfer payments and other concessions (eg the Family Tax Benefit, the Baby Bonus, Child Care Benefit, the Commonwealth Seniors Health Card (CSHC) and the Seniors Supplement).
This will make some individuals and families eligible for transfer payments or for a larger transfer payment.
Medical Expenses Rebate Threshold Raised
From 1 July 2010, the medical expenses rebate threshold will increase from $1,500 to $2,000.
Taxpayers presently receive a rebate equal to 20% of net un-reimbursed eligible medical expenses above $1,500. This $1,500 threshold will increase to $2,000.
In addition, from 1 July 2011, the threshold will be indexed annually to the Consumer Price Index (CPI).
Medicare Levy Thresholds Increased for 2009/10
From the 2009/10 income year, the Medicare levy low-income thresholds will be increased to $18,488 for singles (up from $17,794 for 2008/09) and to $31,196 for those who are members of a family (up from $30,025 for 2008/09).
The additional amount of threshold for each dependent child or student will also be increased to $2,865 (from $2,757).
From 1 July 2009, the Medicare levy low-income threshold for pensioners below Age Pension age will be increased to $27,697 (from $25,299).
This increase will ensure that pensioners below Age Pension age do not pay the Medicare levy while they do not have an income tax liability.
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