EXPLANATORY STATEMENT
STATUTORY RULES 1987 NO. 92
ISSUED BY THE AUTHORITY OF THE TREASURER INCOME TAX REGULATIONS (AMENDMENT)
The purpose of these regulations is to provide for new rates of tax instalment deductions (PAYE deductions) for salary or wages paid on or after 1 July 1987. The new rates of tax give effect to the second and final stage of reform of the personal income tax rate scale announced on 19 September 1985 in the Statement on Reform of the Australian taxation system. These new rates, together with the reduced rates that took effect from 1 December 1986, were declared in the Income Tax Rates Act 1986 which received the Royal Assent on 4 November 1986.
For resident taxpayers the changes to the rate scale from 1 July 1987 are as follows -
Taxable income range
Exceeding | Not Exceeding | Existing rate | Rate from 1 July 1987 |
$ | $ | % | % |
|
|
|
|
5,100 | 12,600 | 24 | 24 |
12,600 | 19,500 | 29 | 29 |
19,500 | 35,000 | * | 40 |
35,000 |
| 55 | 49 |
* previously $19,500 - $28,000 : 43 per cent
$28,000 - $35,000 : 46 per cent
For non-resident taxpayers, the reduced rates shown above apply to taxable income in the relevant ranges above $19,500.
Notes on each of the amending regulations are set out below:
Commencement
By Regulation 1 the amending regulations are to come into operation on 1 July 1987.
Third Schedule
Regulation 2 repeals the Third Schedule to the Income Tax Regulations and substitutes a new Third Schedule. The Third Schedule contains a series of tables specifying the values of components to be used in a formula from which an employee’s weekly tax instalment amounts will be calculated. Reflecting the personal income tax rate scale to apply from 1 July 1987, the new values of components and the new ranges of weekly earnings amounts to which those values are to apply from 1 July 1987 are set out in the new Third Schedule.
The tables in the Third Schedule also reflect the Medicare levy of 1.25 per cent, the low income thresholds below which no Medicare levy is payable by an individual, a married couple or a sole parent and the shading-in of the levy above the thresholds. By the operation of the low income thresholds, individuals with taxable incomes of $8,030 or less, and married couples and sole parents with family incomes of $13,370 or less are exempt from the levy. The income threshold for married couples and sole parents is increased by a further $1,660 for each dependent child or student.