Individual Tax Rates – Next Year’s Rates

The recent Federal Budget made no changes to the previously announced personal tax rate scales. As a reminder, we have listed the income tax rates to apply from 1 July 2009 below, as well as the change to the income that can be earned by minors (under age 18).

The tax rates to apply from 1 July 2009 are:

Tax Band Tax Rates
$0 – $6,000 Nil
$6,000 – $35,000 Nil plus 15% on balance
$35,001 – $80,000 $4,350 plus 30% on balance
$80,001 – $180,000 $17,850 plus 38% on balance
$180,000 + $55,850 plus 45% on balance

Level of Tax Free Income That Can be Distributed to Minors

For those that have family trusts and make distributions of income to minors (ie those children under 18 years of age), it is worth noting there is an increase in the level of income that can be distributed where no tax is payable over the next 3 years. This is as a result of increases to low income rebate that are legislated to apply.

As they stand now, the level of income a trustee may consider distributing to a child where no further tax is payable by the child (depending on if the child has other investment income in their own name) is as follows:

Tax Year Threshold for Minor Where No Tax
30 June 2008 $1,666
30 June 2009 $2,666
30 June 2010 $3,000
30 June 2011 $3,333

Note that as always, this threshold does not apply to any salary or wages the child earns from part time/casual employment. Such income is entitled to the various low tax rates that may apply as if the child was an adult.

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