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Changes to personal income tax

The Personal Income Tax Plan has gone through recent changes regarding rates, thresholds and offset entitlements. These changes were announced in the 2018-2019 Federal Budget and were implemented at the start of the 2019 financial year. For the upcoming tax season, individuals should review these changes in case they are affected.

The 32.5% tax bracket was increased from $87,000 to $90,000 for the years 2018 to 2022. The following two years will see a further increase to $120,000 and in 2024 it will increase again to $200,000. These changes will apply to residents, foreign-residents and working holiday makers. Pay As You Go (PAYG) withholding rates and schedules will also be updated to include these changes.

Australian residents whose income does not exceed $125,333 could now be entitled to an addition to the low and middle income tax offset. This can be available after an assessment of a person’s individual income tax return. This addition applies to the 2018 to 2022 financial years. The amount you receive will be based on the following income levels:

In 2022 and future financial years, the low income tax offset will be amended to include individuals who receive less than $66,667, pending assessment of individual tax return. This offset will be $645, reduced by 6.5% of the amount by which your income exceeds $37,000 but does not exceed $41,000 and a further 1.5% of the amount by which your relevant income exceeds $41,000.

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Tax on super death benefits for dependants vs non-dependants

July 9, 2020

A super death benefit is the super paid after a person’s death, usually to a nominated beneficiary. These benefits are subject to different tax treatments, depending on whether the beneficiaries are dependant or non-dependant.

Superannuation death benefits will generally be received tax-free by tax dependants, who are considered to be:

Dependants will not have to pay tax on the tax-free component of their super in the event that they:

However, they will be taxed at their marginal rate if they receive a capped benefit income stream and:

Not all super death benefits are subject to tax; for non-dependants, there is a taxable portion. This component is largely made up of after-tax super contributions that the deceased member has made.

Super death benefit payments are subject to tax when:

Non-dependants must calculate how much money in the super account is a:

The amount of tax non-dependants pay will be based on their marginal tax rate, however, this amount may be reduced by tax offsets. For the taxed element of the taxable component, the effective tax rate is your marginal tax rate of 17% (whichever is lower). For the untaxed element of the taxable component, the effective tax rate is 32% or your marginal tax rate (whichever is lower).