The Federal Government's proposed Temporary Budget Repair Levy of 2% has passed the Senate and will become effective from 1st July 2014.
The Levy adds an extra 2% tax to that part of an individual's taxable income that exceeds $180,000. This effectively makes the top marginal rate of tax 47% (plus Medicare), and will apply for three years from 1st July.
The rate of Fringe Benefits Tax (FBT) will increase to 47%, in line with the Levy, as will a number of other taxes and penalties that are connected to the top marginal rate of tax. The FBT rate increase, however, will not apply until 1st April 2015, and will cease 1st April 2017, so in effect it will only apply for two years.
While the Government seems to be having difficulty finding support for many of its Budget proposals, the Budget Repair Levy passed the Senate with support from Labor.