Tax rates 2010-11

Tax rates 2010-11

Tax rates 2010-11 (non-residents)

What rate of tax applies to the income of minors?

The tax rates featured in the table below apply in 2009-10 for minors who:

· are Australian residents

· are not excepted persons, and

· have no excepted income.

If the minor's taxable income is less than $63,750, they will get the low income tax offset. The maximum tax offset of $1,350 applies if their taxable income is $30,000 or less. This amount is reduced by four cents for each dollar over $30,000.

Income thresholds for Medicare levy reduction

Individual income thresholds

If your taxable income is equal to or less than your lower threshold amount, you do not have to pay the Medicare levy. If your taxable income is greater than your lower threshold and less than or equal to your upper threshold amounts, you pay only part of the Medicare levy:

Medicare levy surcharge

Individuals and families on incomes above the Medicare levy surcharge (MLS) thresholds, who do not have an appropriate level of private patient hospital cover, pay MLS for any period during the year that they did not have this cover.

The MLS is in addition to the 1.5% Medicare levy. We calculate MLS at the rate of 1% of:

· your taxable income

· your reportable fringe benefits, and

· any amount on which family trust distribution tax has been paid.

When don't you have to pay the surcharge?

You do not have to pay MLS if you and all your dependants (including your spouse):

· were in a Medicare levy exemption category for the whole of the income year, or

· had an appropriate level of private patient hospital cover.

When do you have to pay the surcharge?

You may have to pay MLS for any period during the year that you or any of your dependants did not have an appropriate level of private patient hospital cover for the whole income year and your income for MLS purposes was above a certain amount - for example, in 2009-10 if you were a single person without dependants your income for MLS purposes must be more than $73,000.

Appropriate level of private patient hospital cover

An appropriate level of private patient hospital cover is cover provided by an insurance policy issued by a registered health insurer for some or all hospital treatment provided in an Australian hospital or day hospital facility which has an excess of:

· $500 or less (for a policy covering only one person), or

· $1,000 or less (for a policy covering more than one person).

Family situation

Whether you have to pay MLS depends on your family circumstances - for example, the income for MLS purposes thresholds are higher if you have dependent children.

Income for MLS purposes

Whether you have to pay MLS depends on your income for surcharge purposes. This is referred to as your income for MLS purposes and is the sum of your:

· taxable income

· reportable fringe benefits

· total net investment losses

· reportable super contributions

Super co-contributions

About the super co-contribution

The superannuation (super) co-contribution is a government initiative to help eligible individuals boost their super savings for the future.

If you are a low or middle-income earner, you can take advantage of the super co-contribution payment by making eligible personal super contributions to your super fund or retirement savings account (RSA). The government will then match up to $1,000 of your personal super contributions.

You don't need to apply. If you're eligible, all you need to do is make personal super contributions to your super fund or retirement savings account and lodge an income tax return.

The maximum super co-contribution payable, and the way we work out this amount depend on the income year in which you made your eligible personal super contributions and whether your total income falls between the super co-contribution income thresholds for that year.

Super co-contribution and tax

The super co-contribution:

· is not subject to tax when it is paid to your super fund or RSA

· is not included as income in your tax return

· is preserved in a super fund or RSA and can only be accessed when other preserved amounts can be accessed.

Earnings on the super co-contribution will be taxed like any other earnings of the super fund or the RSA provider.

Super co-contribution income thresholds

There are two super co-contribution thresholds - a lower income threshold and a higher income threshold. If you are eligible for the super co-contribution and your total income is equal to or less than the lower income threshold, you are eligible for the maximum super co-contribution amount. If your income is between the lower and higher income thresholds, when your entitlement is calculated it is subject to the taper/reduction rate.

The taper/reduction rate is the amount by which your super co-contribution entitlement amount reduces as you move from the lower income threshold amount to the higher income threshold amount. You are not entitled to a super co-contribution once your total income is equal to the higher income threshold.

Income tests

There are two income tests you must satisfy to be eligible for the super co-contribution. The first is the income threshold test, and the second is the 10% eligible income test.

Both income tests use your total income to measure if you meet the eligibility requirements. However, your total income is calculated differently for the purposes of each income test.

In both of the income tests, your total income may be different to your taxable income.

Income threshold test

For the purpose of the income threshold test from the 2009-10 income year onwards, your total income is the sum of:

· your assessable income for the income year

· your reportable fringe benefits total (RFBT) for the income year

· the total of your reportable employer super contributions

less

· your allowable business deductions.

For the 2007-08 and 2008-09 income years, your total income is the sum of:

· your assessable income

· your RFBT

less

· your allowable business deductions.

To receive the super co-contribution, your total income (less allowable business deductions in the 2007-08 and later income years) must be less than the higher income threshold for that income year.

· concessional - which are generally made to a super fund for or by you in a financial year and are included in the assessable income of the super fund (for example, super guarantee, salary sacrificed amounts and any amount you are allowed as a personal super deduction in your income tax return)

· non-concessional - which are generally made to a super fund by or for you in a financial year and are not included in the super fund's assessable income (for example, personal contributions you make from your after-tax income).

Summary of contributions caps

In the 2010-11 Federal Budget the government announced that, from 1 July 2012, the concessional contributions cap for individuals who are 50 years old or over will remain at $50,000 where their total super balances are below $500,000.

These proposed changes have not received royal assent and are not law.

What is the current concessional contributions cap?

The concessional contributions cap for the 2010-11 financial year is $25,000 if you are under 50 years old on 30 June of the financial year, and the transitional contributions cap is $50,000 if you are 50 years old or over on 30 June 2011. The $25,000 cap will be indexed annually to AWOTE and rounded down to the nearest multiple of $5,000.

Contributions over the cap amount are subject to 31.5% tax. This tax is called the excess concessional contributions tax. Any excess concessional contributions also count as non-concessional contributions.

All concessional contributions to all of your super funds in a financial year are counted toward your concessional contributions cap.

A concessional contribution is counted towards the cap in the financial year your super fund receives it, not when the contributor pays it to your fund.