2012 Tax Changes – new Tax Brackets

Brand new tax brackets – including carbon tax assistance

As part of the government’s introduction of the carbon tax, there’ll be some dramatic changes to the income tax rates – including the adjustment of the tax-free threshold to $18,200 from the current level of $6,000. That means you’ll be able to earn up to $20,542 before any tax is payable at all.

These changes are crucial for employers. Next year, your staff will have less tax withheld from their paychecks, so you’ll need to make the necessary changes to ensure they’re being paid correctly.

Here are the tax brackets for the 2011-12 year, followed by the new tax brackets, which will take effect from the 2012-13 year.

2011-12:

• $0 – $6,000 = Nil
• $6,001 – $37,000 = 15c for every $1 over $6,000
• $37,001 – $80,000 = $4,650 plus 30c for every $1 over $37,000
• $80,001 – $180,000 = $17,550 plus 37c for every $1 over $80,000
• $180,001 and over = $54,550 plus 45c for every $1 over $180,000

2012-13:

• $0 – $18,201 = Nil
• $18,201 – $37,000 = 19c for each $1 over $18,200
• $37,001 – $80,000 = $3,572 plus 32.5c for every $1 over $37,000
• $80,001 – $180,000 = $17,547 plus 37c for every $1 over $80,000
• $180,001 and over = $54,547 plus 45c for each $1 over $180,000

At the same time, the maximum value of the low-income tax offset reduces from $1,500 to $445, and after that, will be reduced by 1.5 cents in every dollar over $37,000. Previously, that number was at $30,000. From 2015, that figure will be reduced to just $300.

The pensioner tax offset will merge with the new senior Australians tax offset. Meanwhile, there have also been some changes to the Medicare levy and Medicare levy surcharge thresholds.

From July 1, the Medicare levy surcharge thresholds will be changed, while the low-income thresholds will be changed as well. The full details of those changes are available on the Australian Tax Office’s website here.