- What are the current tax rates for resident individual taxpayers?
- What is the current Medicare levy rate?
- When does the Medicare levy surcharge apply?
- What is the current company tax rate?
- What is the current fringe benefits tax rate?
- What tax rate applies to the income of a superannuation fund?
- What are the current aged-based superannuation deduction limits?
- What are the superannuation contribution and deduction limits going to be from 1 July 2007
- What are the changes to self-employed people and superannuation
- What is the superannuation choice all about?
- What are the changes to self-employed people and superannuation
TAX CONSULTING
| 1. | What are the current tax rates for resident individual taxpayers? |
The new tax rates commencing 1 July 2006 are as follows:
Taxable Income Tax Payable
$ $
0 - 6,000 Nil
6,001 – 25,000 Nil + 15% of excess over 6,000
25,001 - 75,000 2,850 + 30% of excess over 25,600
75,001 - 150,000 17,850 + 40% of excess over 75,000
150,001 + 47,850 + 45% of excess over 150,000
The tax rates for the year ended 30 June 2006 are as follows:
Taxable Income Tax Payable
$ $
0 - 6,000 Nil
6,001 - 21,600 Nil + 15% of excess over 6,000
21,601 - 63,000 2,340 + 30% of excess over 21,600
63,001 - 95,000 14,760 + 42% of excess over 63,000
95,000 + 28,200 + 47% of excess over 80,000
| 2. | What is the current Medicare levy rate? |
The Medicare levy rate is 1.5% of taxable income, subject to certain exclusions and reductions.
http://calculators.ato.gov.au/scripts/axos/axos.asp?CONTEXT=&KBS=medicare.XR4&go=ok
| 3. | When does the Medicare levy surcharge apply? |
The Medicare levy surcharge is imposed at 1% of the total of taxable income and reportable fringe benefits if the taxpayer, the spouse and all dependants are not covered by private hospital insurance and the following thresholds are exceeded:
| Status |
Surcharge Threshold |
|
| Single (no children) |
$50,000 |
| Couple (no children) |
$100,000 |
| Single/couple (with children) |
$100,000 |
| |
(+ $1,500 per child after first) |
| 4. | What is the current company tax rate? |
30%.
| 5. | What is the current fringe benefits tax rate? |
46.5% of the grossed up taxable value of the fringe benefit.
The FBT rate is to be reduced from 48.5% to 46.5% effective 1 April 2006. The type 1 gross up rate will be 2.0647 and the type 2 rate will be 1.8692.
Several changes to FBT are effective from 1 April 2007.
· An increase in the in-house exempt fringe benefit threshold from $500 to $1,000.
· The minor benefits exemption increases from $100 to $300. Minor benefits may total more than $300 as long as the individual benefit is less than $300 and the benefit is infrequent.
· The reportable fringe benefits exclusion will increase from $1,000 to $2,000.
| 6. | What tax rate applies to the income of a superannuation fund? |
15%.
| 7. | What are the current aged-based superannuation deduction limits? |
The aged-based superannuation deduction limits for the year ended 30 June 2007 are as follows:
Age 2007 Limit
$
Under 35 15,260
35 to 49 42,385
50 and over 105,113
A Self-employed person’s deduction for superannuation contributions paid is limited to the lesser of:
· $5,000 plus 75% of the excess over $5,000; and
· The person’s aged-based limits (per above)
| 8. | What are the superannuation contribution and deduction limits going to be from 1 July 2007 |
Aged-based deduction limits will be replaced with a new annual contribution limit of $50,000. Concessional contributions will be limited to $50,000 per annum, with contributions in excess of this limit taxed at the highest marginal tax rate. The new threshold will apply per person.
Transitional arrangements have been proposed for people age 50 and over. These are shown below.
Financial year Individuals aged 50 and over
Maximum contribution taxed at 15%
2007/08 $100,000
2008/09 $100,000
2009/10 $100,000
2010/11 $100,000
2011/12 $100,000
2012/13 $50,000
Undeducted contributions would be capped at $150,000 per year, with consideration given to whether the cap should be averaged over three years to accommodate larger one-off payments. If implemented, this initiative would apply from 9 May 2006. This would counter any strategies involving larger undeducted contributions in the intervening period prior to the legislation being passed.
The ability to make deductible superannuation contributions would be extended to age 75, subject to contribution standards.
|
Current contribution rules (as at 1 July 2005) |
|
Contributions below the
Age-based limits |
|
|
Under 35 $14,603 pa |
|
|
35 – 49 $40,560 pa |
15 % contributions tax |
|
50 – 69 $100,587 pa |
|
|
Contributions above the
Age-based limits |
15% contributions tax plus 30% deduction denied |
|
Proposed contribution rules (as at 1 July 2007) |
|
Concession contributions limited to $50,000 pa * |
15% contributions tax |
* These contributions would be fully deductible. Contributions in excess of this limit would be taxed at the highest marginal tax rate. Transitional rules may apply for individuals over the age of 50, see above.
| 9. | What are the changes to self-employed people and superannuation |
Contributions made by self-employed people will be treated in the same way as contributions made by employers on behalf of employees. The current limit of $5,000 plus 75% of the balance (with a deduction up to the age-based limit) will no longer apply. It will be replaced by the annual contribution limit of $50,000. This is a positive simplification of the current contribution rules.
The Government superannuation co-contribution would be extended to undeducted contributions made by self-employed individuals from 1 July 2007. This will be most attractive to small or part-time business operators.
| 10. | What is the superannuation choice all about? |
For a comprehensive discussion regarding the commencement and operation of Choice of Super Fund rules, please click on the link below:
http://www/icaa.org.au/inc/inc_printview.cfm?id=A111289407
| 11. | What are the changes to self-employed people and superannuation |
Family Tax Benefit
From 1 July 2006, the family income test for the maximum rate of Family Tax Benefit (Part A) will be increased to $40,000 (previously $33,361 in 2005/06).
Large Family Supplement
From 1 July 2006, the Large Family Supplement of $248 per year will be extended to families with three or more children, who qualify for FTB (Part A). Currently, the supplement is only available to families with four or more children who are entitled to FTB (Part A).
Child Care
The number of government funded places in outside school hours care and family day care will no longer be capped. In addition, all new approved services will automatically be eligible for Child Care Benefit.
