Insights
from Global Mobility
Australia: Changes to personal
income tax thresholds
November 3, 2016
In brief
In the 2016-17 Federal Budget, the government announced that the marginal tax rate of 37 per cent for
individual resident and non-resident taxpayers will start at $87,000 instead of the current $80,000 from
July 1, 2016. Changes to individual income tax brackets became law on October 20, 2016 with
retrospective effect. As a result, individuals earning above $80,000 will now face a lower tax rate of
32.5% on income from $80,001 to $87,000 with effect from July 1st.
Businesses with international assignees should consider factoring these changes into tax equalisation
arrangements, bearing in mind that the cost differential associated with the changes is $315 per year for
each assignee.
In detail
Changes to individual
income tax brackets
In the 2016-17 Federal Budget it
was announced that from July 1,
2016, for individual taxpayers,
the marginal tax rate of 37 per
cent will start at $87,000
instead of the current $80,000.
This change applies to resident
and non-resident taxpayers.
The Treasury Laws Amendment
(Income Tax Relief) Bill 2016
was subsequently introduced
into Parliament on September 1,
2016, with the effect of
amending the Income Tax Rates
Act 1986 to increase the
threshold from $80,000 to
$87,000.
The Bill received Royal Assent
on October 20, 2016, becoming
the Treasury Laws Amendment
(Income Tax Relief) Act 2016.
With effect from July 1, 2016,
individuals earning above
$80,000 will face a lower tax
rate of 32.5% on income from
$80,001 to $87,000.
Retrospective effect
The changes apply with
retrospective effect from July 1,
2016.
For the part of the 2016-17 tax
year which has already passed,
the benefit of the tax changes
will be received by affected
individuals upon assessment of
their 2016-17 Australian income
tax return.
New withholding tables
The Australian Taxation Office
(ATO) publishes tax tables to
assist employers in working out
how much tax to withhold from
payments made to employees.
The ATO updated their
withholding tax tables in
September 2016 following the
Bill being introduced into
Parliament.
The updated tax tables apply
from October 1, 2016.
Tax equalisation impacts
Employers typically calculate
hypothetical tax withholding for
international assignees based on
home country tax rates.
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Insights
Companies with international
assignees who are tax equalised to
Australia should consider updating
the rate of hypothetical tax
withholding that is being applied.
The company’s overall global tax
equalisation costs should also be
updated to ensure future cost
projections take into account the
change in personal income tax
thresholds.
The takeaway
or when the company next does a
hypothetical tax adjustment for
salary as the cost differential
associated with the changes is
$315 per year for each assignee,
and
Companies with international
assignees should consider reviewing
and updating the following
calculations for the increase in
personal income tax thresholds:

the rate of hypothetical tax
withholding for employees who
are tax equalised to Australia.
This may be updated immediately,

future cost projections in relation
to their global mobility program.
New income tax rate tables from July 1, 2016
Residents
Taxable Income
$1 - $18,200
$18,201 - $37,000
$37,001 - $87,000
$87,001 - $180,000
$180,001 and over
Tax on taxable income*
Nil
19c for each $1 over $18,200
$3,572 plus 32.5 cents for each $1 over $37,000
$19,822 plus 37 cents for each $1 over $87,000
$54,232 plus 45 cents for each $1 over $180,000
*The above rates do not include the Medicare levy of 2%, or the Temporary Budget Repair Levy (TBRL) of 2% on
taxable income over $180,000.
Foreign residents
Taxable Income
$0 - $87,000
$87,001 - $180,000
$180,001 and over
Tax on taxable income*
32.5 cents for each $1
$28,275 plus 37 cents for each $1 over $87,000
$62,685 plus 45 cents for each $1 over $180,000
* The above rates do not include the TBRL of 2% on taxable income over $180,000.
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Insights
Let’s talk
For a deeper discussion of how this might affect your business, please contact your PwC Global Mobility Services
engagement team or one of the following individuals:
Global Mobility Services – Australia
Norah Seddon
+61 (2) 8266 5864
[email protected]
Kevin Lung
+61 (2) 8266 7318
[email protected]
Lisa Hando
+61 (8) 9238 5116
[email protected]
Justin Smith
+61 (8) 9238 3428
[email protected]
Shane Smailes
+61 (3) 8603 6097
[email protected]
Anna Law
+61 (7) 3257 8081
[email protected]
Maria Ravese
+61 (8) 8218 7494
[email protected]
Jonathan Dunlea
+ 61 (3) 8603 5424
[email protected]
Jim Lijeski
+ 61 (2) 8266 8298
[email protected]
Global Mobility Services – United States
Peter Clarke, Global leader
+1 203 539 3826
[email protected]
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