Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon. P.J. Keating, M.P.)FINANCIAL IMPACT
Income Tax Rates Bill 1986
Income Tax Bill 1986
The estimated revenue effects in 1986-87, 1987-88 and in a full year of the measures in these Bills are as follows -
| 1986-87 | 1987-88 | Full Year | $m | $m | $m | ||
|---|---|---|---|---|---|---|---|
| Changes to personal income tax rate scale | -1,435 | -4,400 | -4,500 | ||||
| Changes to rates of tax on the unearned income of minors - Division 6AA of Part III of the Assessment Act | -0.3 | +4 | +6 | ||||
| Pro-rating of the tax-free threshold | LESS THAN -0.5 | +85 | +85 |
Taxation Laws (Miscellaneous Provisions) Bill 1986
The estimated net revenue saving from the reduction in the level of the rebate of tax on net medical expenses in excess of $1,000 is NIL in 1986-87, $0.4m in 1987-88 and $0.7m in a full year.
The reduction in the level of the rebates of tax on home loan interest payments, and on an amount included in assessable income in respect of a policy issued by a life assurance company or a friendly society, is expected to have a negligible impact on the revenue.
The estimated cost of the change to the pensioner rebate shade-out threshold is NIL in 1986-87 and $10m in a full year.
The increase in the level of rebates available for recipients of certain social security benefits, and the extension of the rebates to recipients of certain educational allowances, is expected to have a negligible cost in 1986-87 and a cost of $11m in a full year.
The reduction in the rate of tax payable in respect of payments for the use of Aboriginal land for mining purposes is expected to cost $25,000 in 1986-87 and $50,000 in a full year.
The estimated cost of the change in the rate of tax on certain interest paid by companies on bearer debentures is indeterminate but is expected to be negligible.
The changes to the trust recoupment tax legislation should have no effect on the revenue.
Medicare Levy Bill 1986
The estimated gain to the revenue by increasing the rate of Medicare levy to 1.25 per cent from 1 December 1986 is $175m in 1986-87 and $325m in a full year.
The increase in the low income thresholds is estimated to cost $11m in 1986-87 and $23m in a full year.