Work incentives from income tax reform

This tax package will increase disposable incomes and provide additional incentives to participate in the workforce.

From 1 July 2007:

• The 30 per cent threshold will be raised to $30,000
• The Low Income Tax Offset (LITO) will be increased from $600 to $750 per year and phase out from $30,000, up from $25,000.

The increase in the LITO creates an effective tax-free threshold of $11,000 for low income earners.

The increase in the 30 per cent threshold and the LITO allows low income earners, including part-time workers, to keep more of their earnings and provides further incentives to enter the workforce or work additional hours.

Senior Australians who are eligible for the Senior Australians Tax Offset will now pay no tax on their annual income up to $25,867 for singles and $43,360 for couples.

From 1 July 2008:

• The 40 per cent threshold will be raised to $80,000
• The 45 per cent threshold will be raised to $180,000.