Budget 2016: Individuals & Families

May 2016

Families fall into the Losers group this year, with childcare reforms on hold and a marginal tax threshold change.  

The exception is those earning more than $180,000 with the confirmed abolition of the 2% budget repair levy which is sure to be challenged by the Opposition.

Personal tax cuts for middle income earners

Date of effect: 1 July 2016

The 32.5% personal income tax threshold will increase from $80,000 to $87,000 from 1 July 2016.  The new tax rates from 1 July 2016 would be as follows:

These tax rates exclude the Medicare Levy and the 2% debt tax on high-income earners over $180,000 which will come to an end on 30 June 2017.

Low-income earners

Increase in the Medicare low-income threshold

Date of effect: 2015-16 income year

The Medicare low-income threshold for singles, families and seniors and pensioners will increase. 

The current pause in indexation of the income thresholds for the Medicare Levy Surcharge and Private Health Insurance Rebate will also be extended for a further three years. 

Child care reforms on hold

The Government has deferred the implementation of the Child Care Subsidy, Additional Child Care Subsidy and Community Child Care Fund by one year to 1 July 2018 due to the Family Tax Benefit reforms required to fund the child care package not being passed by the Senate.

The Interim Home Based Carer Subsidy Pilot Programme (Nanny Pilot Programme), that started on 1 January 2016 and subsidises care provided by a nanny in a child's home, will be extended for six months to 30 June 2018.  The hourly fee cap will be increased from $7 to $10 from 1 June 2016.

Unemployed youth – subsidies to create path to employment

The Budget unveiled a new program for job seekers as part of its package to boost youth unemployment.

PaTH (Prepare – Trial – Hire) is for job seekers under 25 years of age. The program has 3 elements:

Industry-endorsed pre-employment training (Prepare) - from 1 April 2017, training for up to six weeks will be provided to help job seekers develop basic employability skills, including those required to identify and secure sustainable employment.

Internship placements of up to twelve weeks (Trial) - from 1 April 2017, up to 30,000 internship placements will be offered each year to enable businesses and job seekers to trial their employment fit. Job seekers will receive a $200 fortnightly incentive payment and businesses will receive $1,000 upfront to host an intern. Placements will be voluntary and will be organised by employment services providers. Job seekers must be registered with jobactive, Disability Employment Services or Transition to Work, and have been in employment services for at least six months to be eligible for the internship program.

Youth Bonus wage subsidies (Hire) - from 1 January 2017, employers will receive a wage subsidy of up to $10,000 for job seekers under 25 years old with barriers to employment and will continue to receive up to $6,500 for the most job-ready job seekers. Job seekers must be register with jobactive or Transition to Work, and have been in employment services for at least six months for employers to be eligible for the wage subsidy. 

Funding for this component will be provided from within the existing funding for wage subsidies.

More Information

For more information about the 2016 Federal Budget and how it impacts you or your family, contact us on 02 9957 4033. 

Budget 2016

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This article is provided for information purposes only and correct at the time of publication. It should not be used in place of advice from your accountant. Please contact us on 02 9957 4033 to discuss your specific circumstances.

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