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2% debt tax for high income earners

2% debt tax for high income earners

The debt tax, or Temporary Budget Repair Levy, increases the top marginal rate for individual incomes above $180,000 by 2% from 1 July 2014 for three years. Also set to increase are a number of other tax rates that are currently based on calculations that include the top personal tax rate like family trust distribution tax and excess contributions tax.

To prevent anyone attempting to use the Fringe Benefits Tax system to avoid the levy, the FBT rate will be increased from 47% to 49% from 1 April 2015 until 31 March 2017 to align with the FBT year.

Be aware that if you have a one-off spike in income after 1 July 2014, for example a sale of business, the debt tax is likely to impact on this increase in personal income.

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