NO.078

As announced earlier today by the Prime Minister, the Government will introduce a

temporary levy in order to partially offset the costs of Australia’s defence costs in

East Timor. The levy will apply to individual taxpayers at a rate of 0.5 per cent on total

taxable incomes from $50,001 to $100,000 per annum, and 1 per cent on total taxable

incomes in excess of $100,000 per annum.

The levy will apply for a 12 month period only – commencing from

1 July 2000.

The 0.5 per cent levy will shade in on incomes above $50,000 in the same way as the

Medicare levy. This will mean that the 0.5 per cent Defence-East Timor levy will shade in

over the income range $50,001 to $51,282. The 1 per cent levy will also shade from

$100,001 to $102,564.

The levy will be collected through tax instalments under the pay as you go (PAYG)

withholding and instalment system which commences from 1 July 2000. The levy is estimated

to raise around $900 million in 2000-01.

As the levy will only apply to higher income earners, the value of the personal income

tax cuts to be introduced on 1 July 2000 under the new tax system will be fully preserved

for low and middle income earners.

23 November 1999