Highlights for Individuals

Targeted tax relief to low and middle income earners

The Government will introduce the Low and Middle Income Tax Offset, a non-refundable tax offset of up to $530 per annum to Australian resident low and middle income taxpayers. The offset will be available for the 2019-2022 income years and will be received as a lump sum when you income tax return is lodged.

The benefit of the proposed Low and Middle Income Tax Offset is as follows:

• Taxpayers with taxable incomes of $37,000 or less will receive a benefit of up to $200
• For taxpayers with taxable incomes from $37,000 to $90,000 an offset up to $530 applies
• For taxpayers with taxable incomes from $90,001 the offset will phase out at a rate of 1.5 cents per dollar, being fully phased out at $125,333

The benefit of the Low and Middle Income Tax Offset is in addition to the Low Income Tax Offset.

Protecting middle income Australians from bracket creep

The Government has proposed the following changes to the personal income tax rates, these do not include the Medicare Levy:

Rate (%)	Current tax thresholds Income range ($)	New tax thresholds From 1 July 2018 Income range ($)	New tax thresholds From 1 July 2022 Income range ($)	New tax thresholds From 1 July 2024 Income range ($)
Tax free	0 - 18,200	0 - 18,200	0 - 18,200	0 - 18,200
19	18,201 - 37,000	18,201 - 37,000	18,201 - 41,000	18,201 - 41,000
32.5	37,001 - 87,000	37,001 - 90,000	41,001 - 120,000	41,001 - 200,000
37	87,001 - 180,000	90,001 - 180,000	120,001 - 180,000	Not Applicable
45	>180,000	>180,000	>180,000	>200,000

1. From 1 July 2018, the Government will increase the top threshold of the 32.5% personal income tax bracket from $87,000 to $90,000.
2. From 1 July 2022, the Government will:
   • extend the 19% personal income tax bracket from $37,000 to $41,000; and
   • further increase the top threshold of the 32.5% personal income tax bracket from $90,000 to $120,000.

The Government has also proposed an increase to the Low Income Tax Offset from $445 to $645 from 1 July 2022. This offset will reduce at a rate of 6.5 cents per dollar between incomes.

Ensuring Australians pay less tax by making the system simpler

In the third step of the Personal Income Tax Plan, the Government will simplify and flatten the personal tax system by removing the 37% tax bracket entirely. From 1 July 2024, the Government will extend the top threshold of the 32.5% personal income tax bracket from $120,000 to $200,000. The 32.5% tax bracket will apply to taxable incomes of $41,001 to $200,000 and taxpayers with taxable incomes exceeding $200,000 will pay tax at the top marginal rate of 45%.

No increase in the Medicare levy

The Government has abandoned its commitment to increase the Medicare levy from 2-2.5% from 1 July 2019.

Increasing the Medicare levy low-income thresholds

The threshold for singles will be increased to $21,980. The family threshold will be increased to $37,089 plus $3,406 for each dependent child or student. For single seniors and pensioners, the threshold will be increased to $34,758. The family threshold for seniors and pensioners will be increased to $48,385 plus $3,406 for each dependent child or student.

Deductions denied for vacant land

From 1 July 2019, the Government will deny deductions for expenses associated with holding vacant residential or commercial land, including interest incurred to finance the acquisition of the land. Deductions for expenses associated with holding the land will be available once a building has been constructed on the land, it has received approval to be occupied and is available for rent. Denied deductions will not be able to be carried forward for use as a deduction in later income years, but denied deductions can be included in the cost base of the land.

Compliance activities targeting individuals and their tax agents

The Government will provide $130.8 million to the ATO from 1 July 2018 to increase compliance activities targeting individual taxpayers and their tax agents. The ATO has identified a number of significant compliance issues for individual taxpayers.