As promised in our blog last week, we intend to provide details of policies announced during the election that affect financial planning strategies for the future. Last Friday the Australian Labor Party announced their tax plans for the future. The details of their plan are as follows:
In 2008-09
-
Low Income Tax free threshold due to the Low Income Tax Offset to rise from $11,000 to $14,000.
-
Start of the 30% threshold to increase from $30,001 to $34,001.
-
Start of the 40% threshold to increase to $80,001.
-
Start of the 45% threshold to increase to $180,001 (as promised in the budget in May).
In 2009-10
-
Low Income Tax free threshold due to the Low Income Tax Offset to rise from $14,000 to $15,000.
-
Start of the 30% threshold to increase from $34,001 to $35,001.
From July 1, 2010
-
Low Income Tax free threshold due to the Low Income Tax Offset to rise from $15,000 to $16,000.
-
Start of the 30% threshold to increase from $35,001 to $37,001.
-
Second top marginal rate to be cut from 38% to 37%.
The major difference from the Liberal Party policy is that the top marginal tax rate for those earning more than $180,000 will not be reduced from 45% to 42% over 2009 - 2011.
The Labor policy also announced an Education Tax Refund to be funded by not reducing the top marginal tax rate. All families who receive Family Tax Benefit (Part A) will be eligible for:
· A 50 % refund every year for up to $750 of education expenses for each child attending primary school (maximum $375 per child, per year).
· A 50 % refund every year for up to $1,500 of education expenses for each child attending secondary school (maximum $750 per child, per year).
Families would submit their application for this refund as part of their annual tax return.
Regards,
Scott Keefer
