Australians earning income in excess of $180,000 a year will be hit by a three-year Temporary Budget Repair Levy.
The Government’s Budget papers confirmed the levy saying that it would apply to high income individuals from 1 July, 2014, until 30 June, 2017.
“The Temporary Budget Repair Levy will apply at a rate of 2 per cent on individuals' taxable income in excess of $180,000 per annum,” it said.
The Budget papers noted that a number of other tax rates that were currently based on calculations which include the top personal tax rate would also be increased.
“With the exception of the fringe benefits tax (FBT) rate, these tax rates will be increased for the same period that the Temporary Budget Repair Levy is in place,” it said.
“These consequential amendments are important to maintain integrity and fairness in the tax system.”
The Budget papers said that to prevent high income earners from utilising fringe benefits to avoid the levy, the FBT rate would be increased from 47 per cent to 49 per cent from 1 April, 2015, until 31 March, 2017, to align with the FBT income year.
“The cash value of benefits received by employees of public benevolent institutions and health promotion charities, public and not‑for‑profit hospitals, public ambulance services and certain other tax‑exempt entities will be protected by increasing the annual FBT caps. In addition, the fringe benefits rebate rate will be aligned with the FBT rate from 1 April, 2015.
“This measure is expected to increase revenue by $3.1 billion over the forward estimates period,” the Budget papers said.
