Before you complete your tax return for 2015, there are some changes you should be aware of in case they affect you.
Mature age worker tax offset
You can no longer claim the Mature age worker tax offset (MAWTO) in your tax return. Previously, to be eligible for the offset you needed to be an Australian resident, be born before 1 July 1957, and receive income from working (within certain limits).This means that the 2013─14 tax return is the last return in which you can claim the offset, so you won’t be able to claim it in your 2015 tax return.
Dependent spouse tax offset
You can no longer claim the Dependent spouse tax offset (DSTO) in your tax return. In addition, a person who is eligible for the zone, overseas civilian or overseas forces tax offset will, from 1 July 2014, only be entitled to claim for a dependent (including a spouse) who is an invalid or cares for an invalid. If you have claimed the DSTO by reducing the tax withheld by your employer during the year, this may result in you having an amount to pay when you lodge your tax return. You’ll need to give an updated TFN declaration (or Withholding declaration) to your employer for 2015-16 to increase the tax they deduct from your pay.
Net medical expenses tax offset
The Net medical expenses tax offset is being phased out. In most cases, you will only be eligible to claim the offset this year if you received it in your 2013-14 income tax assessment. This is the final year you can claim the offset. This does not apply to you if you had medical expenses relating to disability aids, attendant care and aged care. You can continue to claim the offset for these expenses until 30 June 2019.
Temporary budget repair levy
As part of the 2014-15 Federal budget the Government introduced a Temporary Budget Repair Levy. Individual taxpayers with a taxable income of more than $180,000 per year will have had additional tax withheld by their employer, starting from 1 July 2014. The levy is payable at a rate of 2 per cent of each dollar of a taxpayer’s taxable income over $180,000. It applies to both residents and non-residents from 1 July 2014 and applies to the 2014-15, 2015-16 and 2016-17 income years. In some cases the levy is payable even if you have a taxable income of $180,000 or less.
If the levy applies to your income, it will generally appear on your Notice of Assessment you receive after you lodge your 2015 tax return.
Changes for 2015-16
Some changes won’t affect your 2015 tax return but they may impact you in the new financial year (from 1 July 2015) and in your 2016 tax return.
Private health insurance
From 1 July 2015, the income thresholds used to calculate Medicare levy surcharge (MLS) and Private health insurance (PHI) rebate will not be adjusted for three years. Freezing the thresholds from 2015-16 to 2017-18 may result in people with incomes just below each threshold moving into a higher income threshold sooner if their income increases. This means, if:
- you have private health insurance, your private health insurance rebate percentage entitlement may decrease
- you do not have the appropriate level of private patient hospital cover, you may have to pay the Medicare levy surcharge or if you paid the surcharge in the previous year, your surcharge rate may increase.
If you have a pay increase, you may wish to contact your health fund to nominate a different rebate tier to ensure that the correct rebate tier is applied.
No increase to the tax-free threshold
The tax cuts due to commence 1 July 2015 will no longer apply. This means that the tax-free threshold remains at $18,200 and the second marginal tax rate remains at 32.5%.