What’s new for individual tax?
Income tax thresholds
The various threshold amounts and rates for the 2021–22 income year are set out below.
|Item||Threshold/rate from 1 July 2021|
|CGT improvement threshold||$156,784|
|Division 7A benchmark interest rate||4.52%*|
|Car limit (depreciation)||$60,733|
|Car expenses – cents per km method||72 cents*|
Employee truck driver – reasonable meal expenses
|Overtime meal allowance – reasonable amount||$32.50|
|Invalid and invalid carer offset (IICTO)||$2,833**|
|Maximum adjusted taxable income where IICTO cuts out||$11,614**|
* The Division 7A benchmark interest rate and cents per km rate are the same as for 2020–21.
** Not official ATO figures.
Medicare levy surcharge and private health insurance
The income thresholds for the Medicare levy surcharge and private health insurance tax offset purposes have been frozen for another 2 years (until 30 June 2023). The thresholds are:
|No surcharge & maximum offset||Tier 1||Tier 2||Tier 3|
|Singles||$90,000 or less||$90,001–$105,000||$105,001–$140,000||$140,001 or more|
|Families*||$180,000 or less||$180,001– $210,000||$210,001– $280,000||$280,001 or more|
* The family income threshold is increased by $1,500 for each dependent child after the first child.
The Medicare levy surcharge is 1% for Tier 1 taxpayers, 1.25% for Tier 2 taxpayers and 1.5% for Tier 3 taxpayers.
The private health insurance tax offset percentage is highest for Tier 1 taxpayers and lowest for Tier 3 taxpayers. The percentage also varies depending on the ages of the persons covered by the relevant health insurance policy. There are 3 age brackets – under 65, 65 to 69 and 70 or above.
Here are the 2021–22 repayment rates and thresholds if you have a study or training loan such as a Higher Education Loan Program (HELP), VET Student Loan (VSL) or Trade Support Loan (TSL) debt.
|Repayment income||Repayment rate|
|$47,014 – $54,282||1.0%|
|$54,283 – $57,538||2.0%|
|$57,539 – $60,991||2.5%|
|$60,992 – $64,651||3.0%|
|$64,652 – $68,529||3.5%|
|$68,530 – $72,641||4.0%|
|$72,642 – $77,001||4.5%|
|$77,002 – $81,620||5.0%|
|$81,621 – $86,518||5.5%|
|$86,519 – $91,709||6.0%|
|$91,710 – $97,212||6.5%|
|$97,213 – $103,045||7.0%|
|$103,046 – $109,227||7.5%|
|$109,228 – $115,781||8.0%|
|$115,782 – $122,728||8.5%|
|$122,729 – $130,092||9.0%|
|$130,093 – $137,897||9.5%|
|$137,898 and above||10%|
Granny flat arrangements
From 1 July 2021, capital gains tax (CGT) does not apply when a granny flat arrangement is created, varied or terminated.
A granny flat arrangement is a written agreement that gives an eligible person the right to occupy a dwelling for life. The owner or owners of the dwelling must be individuals. They must enter into a non-commercial granny flat arrangement with the eligible person.
An individual is an eligible person if they:
- have reached pension age; or
- require assistance for day-to-day activities because of a disability or are likely to continue needing assistance because of their disability for at least 12 months. An individual who is eligible for the disability support pension would qualify as an eligible person, but an individual who does not qualify for the disability support pension can still be an eligible person.
Talk to our KMT tax adviser if contemplating entering into a granny flat arrangement with an elderly or disabled person.
No GDP adjustment for 2021–22
The GST and PAYG instalment amounts are usually adjusted every year using a formula known as the gross domestic product (GDP) adjustment.
However, the ATO has announced that the GDP adjustment to work out quarterly GST and PAYG instalment amounts for the 2021–22 income year is nil. It was also nil for 2020–21.
The article is provided for general information purposes only and is not intended as professional advice. Readers should not act on the information contained therein without professional advice from a suitably qualified accountant.
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