Am I right in my understanding that Medicare levy applies on taxable income and MLS applies on adjusted income? So, if I am in 37% tax bracket, for NG purposes I get 37%+2% back on expenses right?
Your marginal tax rate is 39% (including medicare). Each extra dollar of deductions or outgoings for the IP would result in a refund of 39cents. Of course since tax applies in a progressive manner deductions apply in a regressive manner when these deductions cause taxable income to fall below $80,001. The benefit becomes 34.5% Adjusted taxable income is used for calculating Medicare Levy Surcharge not Medicate levy. So lets say you do bring taxable income down to $80,001 (ie $10K of repairs costs lets say) the ATI calculation would add back the increased IP loss onto $80,001 so that ATI is $90,001. A single person has a threshold of $90K. So you would become liable for MLS. Ramping up rental deductions is a problem. Other tax deductions may not affect ATI. All these issues affect salalry packaging too.Income for Medicare levy surcharge, thresholds and rates | Australian Taxation Office
