Resident Individual:
The following rates apply to resident individuals for the 2021 income year:
1. The above rates do not include the Medicare levy of 2%.
2. The tax-free threshold may effectively be higher for taxpayers eligible for the Low-Income Tax Offset, the Low and Middle Income Tax Offset, the Seniors and Pensioners Tax Offset and/or certain other tax offsets.
Non-resident Individual
The following rates apply to individuals who are not residents of Australia for tax purposes for the entire income year:
Medicare Levy is not payable by non-residents.
Working Holiday Makers
The following rates apply to the ‘working holiday taxable income’ of an individual who is a ‘working holiday maker’ (e.g., if they hold a subclass 417 visa):
The above rates do not include the Medicare levy of 2%. Note, however, that the Medicare levy is not payable by working holiday makers that are non-residents for tax purposes.
Resident Minor – Unearned (Division 6AA) Income
The following rates apply to the income of certain resident minors (e.g., resident persons who are under 18 years of age on the last day of the income year and are not in a full-time occupation) that is not ‘excepted income’:
1. Medicare Levy may also be payable.
2. Resident minors are not entitled to the Low Income Tax Offset or the Low and Middle Income Tax Offset in respect of ‘unearned’ income.
Non-resident Minor – Unearned (Division 6AA) Income
The following rates apply to the income of certain non-resident minors (e.g., non-resident persons who are under 18 years of age on the last day of the income year and are not in a full-time occupation) that is not ‘excepted income’:
The Medicare Levy is not payable by non-residents.
General Rate
Low-income Thresholds – Individuals
1. No Medicare Levy is payable on taxable income levels at or below the Threshold Amount.
2. If taxable income falls within the Phase-in Limit, the Medicare Levy is payable at 10% of the excess over the Threshold Amount.
3. The Medicare Levy of 2% applies to the entire amount of taxable income.
Low-income Thresholds – Families
A taxpayer may be eligible to pay no, or a reduced, Medicare Levy if their family income is within the thresholds set out below, and the taxpayer:
u has a spouse (including a de facto, same or opposite sex spouse) on the last day of the income year; or
u has not remarried after their spouse died during the income year; or
u is entitled to the Dependant (Invalid and Carer) Tax Offset in respect of the taxpayer’s child; or
u is entitled to a notional tax offset by having sole care of another individual who is either under age 21 or under age 25 and a full-time student. The 2020/21 Medicare Levy low-income thresholds for families are as follows:
Medicare Levy Surcharge – 2020/21
Dependant (Invalid and Carer) Tax Offset
A taxpayer may be entitled to the Dependant (Invalid and Carer) Tax Offset (‘DICTO’) broadly, if they:
• maintain their spouse, who is an invalid or who cares for an eligible invalid;
• maintain their parent or their spouse’s parent, who lives in Australia and is an invalid or who cares for an eligible invalid; or
• maintain their or their spouse’s invalid child, brother or sister who is aged 16 years or older.
Note, the ATO generally refers to this offset as the Invalid and Invalid Carer Tax Offset to avoid the impression that it may be claimed with respect to any dependant of a taxpayer. The maximum offset and adjusted taxable income (‘ATI’) amounts for 2020/21 are as follows:
Notionally Retained Dependant Tax Offsets
The following tax offsets have been abolished, but have been notionally retained for other purposes (e.g., for calculating a taxpayer’s entitlement to the Zone Tax Offset and/or Overseas Forces Tax Offset):
Low Income Tax Offset
Resident individuals (including trustees assessed under S.98 of the ITAA 1936 in respect of presently entitled resident beneficiaries) may be entitled to the Low Income Tax Offset (‘LITO’).
A minor who is not an ‘excepted person’ is ineligible to apply the LITO to reduce tax on their unearned (i.e., Div. 6AA) income.
Low and Middle Income Tax Offset
Resident individuals (including trustees assessed under S.98 of the ITAA 1936 in respect of presently entitled resident beneficiaries) may be entitled to the Low and Middle Income Tax Offset (‘LMITO’).
A minor who is not an ‘excepted person’ is ineligible to apply LMITO to reduce tax on their unearned (i.e., Div. 6AA)income.
Private Health Insurance Tax Offset
The Private Health Insurance (‘PHI’) tax offset (or rebate) is a Government contribution towards the cost of complying policies covering hospital, general treatment or both. ‘Tiers’ based on ‘income for surcharge purposes’ (see page 6) and age are used to determine the rebate percentage and amount.
The rebate percentages are indexed on 1 April each year. Therefore, two percentages apply in calculating a taxpayer’s rebate for an income year – one for the period 1 July to 31 March, and one for 1 April to 30 June.
The income thresholds and rebate percentages that apply for the 2021 income year are as follows:
Seniors and Pensioners Tax Offset
The Seniors and Pensioners Tax Offset (‘SAPTO’) is broadly available to an individual who:
u on at least one day during the income year is eligible for a pension, allowance or benefit under the Veterans’ Entitlements Act 1986, has reached pension age under that Act and is not in jail; or
u on at least one day during the income year is qualified for an age pension under the Social Security Act 1991 and is not in jail; or u has included in their assessable income:
(a) a social security pension or education entry payment (as defined in the Social Security Act 1991); or
(b) a service pension, carer service pension, income support supplement or Defence Force Income Support Allowance (DFISA), as defined in the Veterans’ Entitlements Act 1986, or DFISA-type payment mentioned in Div. 4 of Part VIIAB of that Act; and on at least one day during the income year, is not in jail.
Superannuation Spouse Contribution Tax Offset
The tax offset applies to non-concessional contributions a taxpayer makes for their low-income earning or non-working spouse (married or de facto). The amount of the offset for 2020/21 is set out in the table below.
1. Including reportable fringe benefits and reportable employer superannuation contributions.
2. No offset is available if the spouse exceeds their non-concessional contributions cap for 2020/21 or their total superannuation balance (as at 30 June 2020) equals or exceeds the general transfer balance cap for 2020/21 of $1.6 million.
3. The offset is calculated as 18% of the actual contributions, if this results in a lower amount.
Zone Tax Offset
Taxpayers who are ‘residents’ of specified remote areas in Australia (divided into Zone A and B and special areas within each zone) may be entitled to the Zone Tax Offset. Generally, a taxpayer is a resident of a zone if they reside there (not necessarily continuously) for 183 days or more.
For a list of locations currently in a zone or special area, refer to the ‘Australian Zone List’, which can be found on the ATO website. The zone tax offset levels for the 2021 income year are as follows:
Disclaimer
This content is intended for general information in summary form on tax and legal matters at the time of first publication and is not intended to provide, and should not be relied upon in place of appropriate professional advice. Please consult your tax, legal and accounting advisors before acting or relying on any content provided.
References
https://www.ato.gov.au/rates/individual-income-tax-rates/