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10 Jul 14 Income tax rate changes to proceed from 1 July 2015

On 9 July 2014, the Senate negatived a motion for the second reading of the Clean Energy (Income Tax Rates and Other Amendments) Bill 2013 [No 2]. The Bill would have amended the Clean Energy (Income Tax Rates Amendments) Act 2011 and repealed the personal income tax changes that are legislated to commence on 1 July 2015. The Bill would also have repealed the associated amendments to the low-income tax offset that are legislated to commence on 1 July 2015.

Specifically, under the current law, the personal income tax changes that commence on 1 July 2015 are as follows:

  • the tax-free threshold increases to $19,400;
  • the second personal marginal tax rate increases to 33%;
  • the maximum value of the LITO falls to $300;
  • the withdrawal rate of the LITO falls to 1%; and
  • the threshold below which a person may receive LITO increases to a taxable income of $67,000.

Accordingly, as a result of the Senate's failure to pass the Bill, these changes will still commence on 1 July 2015.


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