Raising the 32.5% personal income tax threshold
The Government will increase the 32.5% personal income tax threshold from $80,000 to $87,000 from 1 July 2016.
This measure will reduce the marginal tax rate on incomes between $80,000 and $87,000 from 37% to 32.5%.
The Government anticipates that this change will prevent around 500,000 taxpayers from moving into the 37% tax bracket. It will ensure that the average full-time wage earner will not move into the second highest tax bracket in the next three years.
Higher Education Loan Program (HELP) changes
The Government will consider options for changing the HELP scheme, including:
- changes to repayment thresholds and rates. For example
- commencing repayment at a lower threshold than the current $54,126; or
- introducing an additional higher contribution rate for high income earners
- change the indexation of HELP repayment thresholds from average weekly earnings to the consumer price index (CPI)
- a renewable lifetime limit on HELP loans
- restrictions on the availability of HELP loans or Commonwealth subsidies to those who have left the workforce permanently
- discontinue the HECS-HELP benefit
- introduce a household income test for HELP repayments; and
- recovery of debts from deceased estates.