• Individuals

Personal taxation measures

The Government has announced changes to personal taxation measures centred on accelerating Higher Education Loan Program (HELP) debt repayment, and increasing the availability of Higher Education Contribution Scheme (HECS) eligible courses as the main changes to education. Further personal taxation matters impacting individuals include tax exempt payments to child sexual abuse survivors and changes to Family Tax Benefit Part A payments.

New HELP repayment thresholds and rates to be introduced

The Government has announced that it will widen the repayment thresholds in a bid to accelerate HELP debt repayment from 1 July 2018.

The current minimum repayment threshold for the 2017/18 year of $55,874 with a repayment rate of 4% is set to decrease to $42,000 and 1% respectively. Conversely, the maximum band will be increased from the 2017/18 year threshold of $103,766 with a repayment rate of 8% to $119,882 and a repayment rate of 10%.

Changes to maximum student contributions will also be introduced from 1 July 2018 to allow an incremental yearly increase in contribution levels of 1.8% each year, totalling a 7.5% increase by 2021.

HECS eligibility has also widened with support places now being offered to students in sub-bachelor courses. Courses with a focus on industry and a probable pathway into related bachelor programs will meet the requirements and students will be excluded from the scheme if they have completed a prior higher education qualification. 

Tax-free payments to child sexual abuse survivors

As part of its Commonwealth Redress Scheme, for survivors of institutional child sexual abuse, the Government announced that any redress payments under the scheme received by people who were sexually abused as children in Commonwealth institutions will be exempt from income tax.

Family Tax Benefit (FTB) Part A changes

The Government has ruled out a proposed rate increase to Family Tax Benefit Part A, however, has made changes to the dollar income test taper rate in an effort to ensure that higher income families are not advantaged. The changes to the test taper rate come in the form of a consistent 30 cents in the dollar income test taper rate for families exceeding the Higher Income Free Area of household income – currently set at $94,316.

Additionally, further changes have been introduced for families with children who do not meet the Government’s immunisation requirements having their supplement payments reduced by $28 per fortnight.

BDO Comment

The widening of the HELP repayment thresholds and increased rates is an expected response from the government in their bid to accelerate repayment of an increasingly growing HELP debt.

Changes to the Family Tax Benefit Part A and payments under the Commonwealth Redress Scheme are equitable and meet community expectations.