Improving incentives through tax cuts

This budget continues the Government’s commitment to structural tax reform, increasing incentives, assisting low income earners and keeping Australia competitive.

From 1 July 2005:

• the 17 per cent marginal tax rate will fall to 15 per cent
• the 42 per cent threshold will be raised to $63,001
• the 47 per cent threshold will be raised to $95,001.

From 1 July 2006:

• the 42 per cent threshold will be raised to $70,001
• the 47 per cent threshold will be raised to $125,001.

Senior Australians who are eligible for the Senior Australians Tax Offset (SATO) will now pay no tax on their annual income up to $21,968 for singles and for couples up to $36,494.

The Medicare levy threshold for senior Australians will be increased to ensure that they do not pay the Medicare levy until they begin to incur an income tax liability.