The New 2024/25 Individual Tax Rates – At what level of Taxable Income will an individual pay less tax than a corporate taxpayer?

For those who are well advanced with the 2024/25 tax planning, Treasury’s 26 January 2024 formal release of the detailed new individual tax rates applying from 2024/25 will result in some tax planning changes. There are of course numerous different reasons (aside from the tax payable) why a company might be chosen to derive assessable income instead of an individual. It may, however, be useful to understand at what level of taxable income a resident individual’s tax and Medicare Levy payable may be equal to or below the up-front amount of company tax payable (at either the 30% or 25% flat corporate tax rate).  This Tax Astute Snapshot explains when this equal tax/levy payable treatment occurs and how it may be relevant for purposes such as Division 7A ITAA 1936 decisions and assessing Part IVA, s.100A ITAA 1936 and similar integrity rule risks. The new tax rates are also restated excluding Medicare Levy and the low-income tax offset (“LITO”) (useful for planning purposes such as PCG 2021/4). Non-resident individual comments are also provided.

Click here to learn more about the proposed new 2024/25 individual tax rates.