PERSONAL TAXATION

Personal Tax Rates – Residents

The Government did not make any changes to the currently legislated tax rates for residents that are to apply from 1 July 2012:

• from 1 July 2012, the tax-free threshold will be increased to $18,200 and the first two marginal tax rates will be increased from 15% to 19% and from 30% to 32.5%, respectively; and
• from 1 July 2015, the tax-free threshold will be $19,400 and the second marginal tax rate will be increased from 32.5% to 33%.

The personal income tax rates and thresholds are summarised for resident taxpayers in the tables below:

Work-related Expenses Standard Deduction Dropped

The Government announced that it will not proceed with the 2010–2011 Budget announcement to allow a standard tax deduction for work-related expenses and the cost of managing tax affairs which was due to commence on 1 July 2013. The Government is pursuing other simplification measures such as tripling the tax-free threshold to $18,200 from 1 July 2012.

Interest Income Discount Not to Proceed

The Government announced that it will not proceed with the 2010–2011 Budget announcement for a 50% discount for interest income which was due to commence on 1 July 2013.

The Government said its public consultation process involving key sector groups, industry participants and consumer groups “revealed concerns with the complexity involved in calculating the discount and its overall effectiveness”.

Schoolkids Bonus

In the lead-up to the Budget, the Prime Minister announced that the Government will make a new, no-strings cash payment, called the Schoolkids Bonus, to certain families with children at school. It will replace the current Education Tax Refund and will apply from 1 January 2013. Each year, families will receive the Schoolkids Bonus worth:

• $410 for each child in primary school; and
• $820 for each child in high school.

The Government said the payment will be “automatic and upfront”, which means eligible parents will not need to keep receipts.

Flood Levy – Further Exemptions

The Treasurer confirmed in the Budget that people who suffered flood damage in 2012 will also be made exempt from the flood and cyclone levy that applies for the 2011­–2012 financial year only. He said that earlier this year, more flooding devastated parts of western Queensland and northern New South Wales.