Australian Federal Budget - May 2007
Strong economic growth and associated high tax revenues, low inflation and a strong employment market has allowed the Federal Treasurer to produce another politically popular 2007/08 Federal Budget.
Key highlights include:
Taxation
Reductions in personal tax (for Australian residents for tax purposes):
- an increase in the thresholds for the 30%, 40% and 45% tax brackets. The 30% tax bracket goes from $25,000 to $30,000 from 1 July 2007.
- from 1 July 2008, raising the 40% marginal tax rate threshold from $75,000 to $80,000, and increasing the 45% marginal tax rate threshold from $150,000 to $180,000.
- from 1 July 2007 an effective tax free threshold of $11,000 for low income earners to improve work incentives for low-paid and part-time workers.
The Treasurer stated that these income tax changes ensure that more than 80% of taxpayers face a top marginal tax rate of 30% or less, with the top marginal tax rate (45%) only applying to around 2% of taxpayers in 2008/09.
Child Care
Child Care Benefit to increase by 10% from 1 July 2007 (plus indexation). The Government will also reimburse 30% of remaining out of pocket expenses with the maximum payment to be $4,096 per child in 2005/06, and $4,211 per child in 2006/07.
Superannuation
From 1 July 2007
- zero tax on pension payments from age 60
- zero tax on lump sum withdrawals from age 60
- no upper limits on tax free death benefits paid to a tax dependant
- limits on contributions to super
Other
Significant spending on defence, transport infrastructure and education . In particular, $5 billion has been allocated to a Higher Education Endowment Fund – a perpetual fund to generate earnings for capital works and research facilities in Australian institutions of higher learning. There is limited spending on the environment, other than the $10 billion over 10 years already announced in relation to water supply infrastructure.
For those conscious of the environment and wanting to consider installing a solar hot water system, the Government is doubling rebates so households will receive up to $8,000 for installing an average system which costs around $14,000.
