Explanatory Memorandum
(Circulated by the authority of the Treasurer, the Hon Peter Costello MP)General outline and financial impact
Reducing personal income tax
Schedule 1 to this Bill amends the Income Tax Rates Act 1986 to reduce the lowest marginal tax rate from 17 per cent to 15 per cent and to increase the top two personal income tax thresholds.
Schedule 1 to this Bill also amends the Medicare Levy Act 1986 to increase the income threshold that applies to taxpayers who are eligible for a rebate of tax under section 160AAAA of the Income Tax Assessment Act 1936 (the senior Australians tax offset).
Date of effect: The proposed amendments apply to assessments for the 2005-06 year of income and later years.
Proposal announced: The measure was announced on 10 May 2005 in the 2005-06 Budget.
Financial impact: This measure will cost:
| 2005-06 | 2006-07 | 2007-08 | 2008-09 |
|---|---|---|---|
| $3.1 billion | $5.6 billion | $6.3 billion | $6.7 billion |
Compliance cost impact: Nil.