I love the phrase “I’m from the government, I’m here to help!”. Every time I hear it I have a little laugh, so when the tax rates are changed under the guise of making the tax system “simpler” and more “transparent” I fall off my chair and roll around on the ground in fits of laughter. I’m surprised the term “fairer” wasn’t used this time round.
No seriously I am talking about Australia’s “Clean Energy Future” and the resultant income tax rate changes that come into effect from 1 July 2012. I believe it came about to help the workers of Australia pay for the increasing costs of everything due to the introduction of the Carbon Tax. As with everything however there is good and bad…
The Good – Tax free threshold is increasing from $6,000 to $18,200. This is actually great news for the young Australians entering the workforce including school students working after school and some first year apprentices. Have taxable income under $18,200 and they won’t have to pay tax on what they earn and they won’t have to lodge tax returns (in most cases).
The Indifferent – From $18,200 up to $37,000 the tax rate is increasing from 15% to 19%. That sounds bad but is offset somewhat by the increase in the tax free threshold amount. So if you earn $37k your tax on that would be $3,572 whereas for your 2012 tax return your tax would be $4,650 which is a saving of $1,078. Not bad, not bad. The Govt anticipates that this amount is how much the cost of everything is going to go up, so if that’s true then if you are at this level of income you won’t be better off but also shouldn’t be worse off.
The Bad – Ok now I’m not a negative type but we now come to those who earn at least $80,000 per year. Between $37k and $80k your income is now taxed at 32.5% instead of the current 30% so you will get a tax saving of…. wait for it… $3. Yes that’s not a typo, you will save $3. Not “save” in a literal sense, I mean you will save $3 on your income tax bill but the forecast increase in living expenses will eat away at that saving in about a day. But you have to admit it does feel good to save the planet right? Come on let’s stay positive.
By the way if you’re sick of working long hours with rotating shifts, constant call outs, unpaid overtime and high taxes and are thinking of starting your own business, give Tate a call or email tate@bostonaccounting.com.au.sa.iig.com.au for some personalised business setup advice.
And for my colleagues who will whinge to me as soon as they read this that I didn’t take into account the phase out of the LITO or other rebates, just keep your shirt on as the figures highlight the now simpler and transparent tax system and taking in those other factors would require a 10 page essay instead of a simple blog post.
© Tate Laycock – All rights reserved.
