Budget Brief: Personal

Budget PersonalGREY3

Budget Brief: Personal


 As is always the case, the impact of the budget on people’s hip pocket has been consuming most of the media’s attention as people attempt to second guess the day to day impact of the budget changes.  Below is a summary of the main changes together with some unresolved areas that currently appear to contain a rose amongst a lot of thorns.


  • As foreshadowed the Government announced the introduction of a Temporary Budget Repair Levy at 2% to apply for 3 years commencing on 1 July 2014 on taxable income in excess of $180,000.


What this means in practice is that an individual with taxable income of $300,000 will pay a levy (tax) of $2,400 being 2% on $120,000 ($300,000 - $180,000).


 A number of other tax rates that are currently based on calculations that include the top personal tax rate will also be increased such as excess contributions tax and TFN withholding.


  • Whilst there were no announcements in relation to personal tax rates, this does not mean that they remain static for the foreseeable future.  In last year’s budget it was announced that the already legislated increase in the tax-free threshold to $19,400 from 1 July 2015 would not proceed, however, despite both Labour and Liberal governments attempting to pass legislation to effect this it has not happened.  The rates as currently legislated are as follow:

Personal tax TABLE

Note that these rates do not include the Medicare levy, currently 1.5%, but to rise to 2% from 1 July 2014.  The effective top marginal rate would be 49% from 1 July 2014 to 30 June 2017.


Therefore the rose in all this is that the nil rate may in fact be increasing to $19,200 in 2015/16, however, the Government may yet weed this rose out.


  • The Medicare levy surcharge and private health insurance offset thresholds are to be frozen for 3 years from 1 July 2015.  Whilst not a direct tax grab it means that as people’s income rises, the number of people moving through the bandings increases, reducing entitlements to the rebate and increasing exposure to the Medicare levy surcharge.


  • Almost all dependant tax offsets will be abolished for all taxpayers from 1 July 2014.  The dependant (invalid and carer) tax offset (DICTO) remains and taxpayers who qualify for existing offsets may qualify for the DICTO.  


If you have any questions in relation to the budget and how these change may impact you or your business please contact your relevant ESV engagement partner on 9283 1666.