Federal Budget 2023: Personal income tax measures 

On May 9, 2023, Treasurer Dr. Jim Chalmers gave the government its second budget. The Federal Budget for 2023–2024 builds a stronger base for a better future. It deals with the problems Australians are having right now, makes it easier for people to take advantage of opportunities in our society, and sets the groundwork for a stronger and more stable economy in the future.

The government delivered a $14.6bn Cost of Living Package focused on energy bill relief, income support and some new super measures.

Increasing the Medicare levy low-income thresholds in Federal Budget

The Government will increase the Medicare levy low-income thresholds for singles, families, seniors, and pensioners from 1 July 2022 as follows:

• The threshold for singles will be increased from $23,365 to $24,276. 
• The family threshold will be increased from $39,402 to $40,939. 
• For single seniors and pensioners, the threshold will be increased from $36,925 to $38,365. 
• The family threshold for seniors and pensioners will be increased from $51,401 to $53,406. 

The family income thresholds for each dependent child or student will increase by a further $3,760 instead of the previous amount of $3,619.

The increase in the thresholds provides cost-of-living relief by taking account of recent CPI outcomes so that low-income individuals continue to be exempt from paying the Medicare levy.

The new federal budget plan is a blessing for people with low-income thresholds.

Exempting lump sum payments in arrears from the Medicare levy

The Government will exempt eligible lump sum payments in arrears from the Medicare levy from 1 July 2024.  This measure will ensure low-income taxpayers do not pay higher amounts of the Medicare levy due to receiving an eligible lump sum payment, for example, as compensation for underpaid wages.

Eligibility requirements will ensure that relief is targeted to taxpayers who are genuinely low-income and should be eligible for a reduced Medicare levy.  To qualify, taxpayers must be eligible for a reduction in the Medicare levy in the two most recent years to which the lump sum accrues. Taxpayers must also satisfy the eligibility requirements of the existing lump sum payment in arrears tax offset, including that a lump sum accounts for at least 10% of the taxpayer’s income in the year of receipt.

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