Changes to Tax Thresholds and Independent Earner Tax Credit
From 1 April 2018, the $14,000 income tax threshold will increase to $22,000, and the $48,000 threshold to $52,000. The Independent Earner Tax Credit (IETC) will be discontinued.
|CURRENT BRACKET $||NEW BRACKET $||RATE|
|1 - 14,000||1 - 22,000||10.5%|
|14,001 - 48,000||22,001 - 52,000||17.5%|
|48,001 - 70,000||52,001 - 70,000||30%|
Why are the tax thresholds changing?
As incomes rise, the marginal tax rates that individuals face also increase. Increasing the bottom two tax thresholds provides greater rewards for low and middle income earners, and is expected to support long-run economic performance.
Why is the Independent Earner Tax Credit being discontinued?
Individuals who receive the Independent Earner Tax Credit will be fully compensated by the increase in the $14,000 tax threshold. Since being introduced, the Independent Earner Tax Credit has had less uptake than expected. Only 32 per cent of eligible recipients claim it during the year they are eligible. Removing the tax credit will also help simplify the system, as individuals will not have to file a tax return at year-end or use a different tax code to claim it.