Carbon Tax - The New Measures at a Glance

26 Nov 12

On 21 July 2011, the Government announced its long anticipated policy on the carbon tax. The emissions levy of $23 per tonne on major polluters will be combined with tax cuts and family payment increases to compensate households for the resulting price rises. How will your tax rates change?
Greg Newbury outlines the key carbon tax assistance measures below.

Personal Income Tax
The tax free threshold will be permanently increased:

• from $6,000 to $18,200 effective 2 July 2012, and
• from $18,200 to $19,400 effective 1 July 2015.

Low Income Tax Offset (LITO) will be reduced:

• from $1,500 to $445 effective from 1 July 2012, and
• from $445 to $300 effective 1 July 2015.

The combined impact of the increase in the tax free threshold and the reduction in LITO is that the effective tax free threshold will rise to $20,542 for the 2013 and 2014 financial years and will rise to $20,979 thereafter.

Senior Australia Tax Offset (SATO) and Pension Tax Offset

The Government has announced that the SATO will increase, providing additional tax cuts to self funded retirees. The Government also proposes to combine the pensioner tax offset with that of the SATO. Details of these proposed changes have not yet been announced.

Assistance through pension, income support and family payments

The government has also announced an increase in pensions, income support and family payments.

The first of these measures will be delivered in May or June 2012 to pensioners and family tax benefit (FTB) recipients through a one off payment called the Clean Energy Advance.

The Clean Energy Advance is a tax exempt one off payment that will be made automatically. The quantum of these payments is as follows:

• Pensioners will receive up to $250 if single and $190 for each eligible member of a couple. Self funded retired who are eligible for the Commonwealth Seniors Health Card (CSHC) will receive $250 if single and $190 for each eligible member of a couple.
• Families receiving FTB Part A or B will receive 1.7% of the maximum annual rate of the payment.
  

After that, on-going assistance will be paid through a new Clean Energy Supplement, commencing from 20 March 2013. This is an ongoing tax exempt payment paid in line with regular payment cycles, and will be indexed by the CPI.

The quantum of these payments is as follows:

• Pensioners will see a 1.7% increase in the maximum rate of the pension. This will commence from 20 March 2013.
• Self funded retirees who are eligible for the CSHC will receive $338 per year for singles and $255 per year for each eligible member of a couple. This will commence from 20 March 2013.
• Family Tax Benefits:

- Both the maximum rate and the base rate of FTB Part A will be increased 1.7%, worth up to $170 per child.
- FTB Part B will be increased by 1.7%, worth up to $69 per family.
- Both these supplements will be paid fortnightly from 1 July 2013.

• Other income support payments will be increased by 1.7%. This will commence from 20 March 2013.

New Low Income Supplement

The Government has also recognised that some families may not receive sufficient assistance through the above measures. These households will be able to apply for an annual, tax exempt low income supplement of $300. This supplement will be paid by Centrelink and will commence from 1 July 2012.

The following income limits apply:

• $30,000 for singles without a dependent child
• $45,000 for couples without a dependent child
• $60,000 for singles with a dependent child
• $60,000 for couples with a dependent child

Other assistance

• A new single income family supplement of up to $300 for single income families with a primary earner income of between $68,000 to $150,000,
• An essential medical equipment payment of $140 per year for eligible claimants, and
• An increase to the small business instant write-off threshold to $6,500 from 1 July 2012.

For further assistance please contact your local Accru office or go to cleanenergyfuture.gov.au

In summary, the proposed tax scales are as follows:

	CURRENT	2012/13	2015/16
	THRESHOLD	MARGINAL RATEº	THRESHOLD	MARGINAL RATEº	THRESHOLD	MARGINAL RATEº
	UP TO $6,000	NIL	UP TO $18,200	NIL	UP TO $19,400	NIL
	6,001	15%	18,001	19%	19,401	19%
	37,001	30%	37,001	32.5%	37,001	33%
	80,001	37%	80,001	37%	80,001	37%
	180,001	45%	180,001	45%	180,001	45%
LITO	UP TO $1,500	4% REDUCTION ON INCOME OVER $30,000	UP TO $445	1.5% REDUCTIONS ON INCOME OVER $37,000	UP TO $300
EFFECTIVE TAX FREE THRESHOLD*	$16,000	20,542	$20,979

*Includes the effect of the tax free threshold and the low income tax offset (LTO)
º Rates exclude the Medicare Levy and Flood Levy

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