How seniors can benefit from carbon tax relief
THE Gillard government has not denied that the carbon tax will cause financial pain. To reduce the pain, cash handouts and tax cuts have been introduced. Rather than compensating everyone, the tax cuts and direct assistance have been firmly targeted at compensating lower income earners.
THE Gillard government has not denied that the carbon tax will cause financial pain. To reduce the pain, cash handouts and tax cuts have been introduced. Rather than compensating everyone, the tax cuts and direct assistance have been firmly targeted at compensating lower income earners.The reduction in tax payable by individuals is a combination of giving with one hand while taking with the other. The giving part comes in the form of an increase in the level of income that a person can earn before paying tax. The old tax-free income level has increased from $6000 to $18,200 a year.In the taking area there has been an increase in the two lowest tax rates and a decrease in the Low Income Tax Offset. The lowest tax rate has increased from 15 per cent to 19 per cent, with the next tax rate increasing from 30 per cent to 32.5 per cent. Up until June 30, the LITO was $1500, from July 1 the LITO has decreased to $445.The combination of this giving and taking means that the actual income level at which no tax is paid has increased from $16,000 to $20,452. This generates an overall tax saving for someone with this income of $681, which is the maximum tax saving delivered under the carbon tax relief measures.The income tax saving steadily decreases for incomes over $20,452 to $303 for incomes between $30,000 and $67,500. From this point the tax benefit decreases further until the tax decrease is $3 for people with income over $80,000. The actual tax saving delivered is greater for some people who paid the once-off flood levy for the 2012 year.With no tax cuts effectively applying to what are classed as high-income earners, one could question whether the carbon tax is more about wealth redistribution than saving the environment.Self-funded retirees who have their retirement assets mainly in super will effectively get no reduction in tax. They will still be subject to price increases resulting from the carbon tax, but may be eligible for compensation in the form of a cash handout.This comes in the form of a seniors supplement of $250 for singles and $190 for each member of an eligible couple. To qualify for the cash handout an individual or couple must: Hold a Commonwealth Seniors Health Card. Have provided details of a bank account to Centrelink into which the payments can be made. Are in Australia or temporarily absent for less than 13 weeks.This last qualification is to stop people who spend more than 13 weeks out of Australia from being eligible for the supplement.Eligibility for a CSHC primarily depends on an individual or a couple having reached pension age but don't qualify for Centrelink or Department of Veterans' Affairs benefits, and have adjusted taxable income of below $50,000 for individuals, $80,000 for couples, and $100,000 for couples separated by illness or respite care.These income levels are calculated by increasing the taxable income for an individual or couple by: Income earned overseas not taxable in Australia. Rental-property and investment losses. Reportable employer fringe benefits. Reportable employer superannuation contributions. Self-employed tax deductible super contributions.If you are a self-funded retiree of pension age but not receiving any benefits, you should register as soon as possible for a CSHC so you will at least get one of the carbon tax relief benefits on offer.
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