1 What is income tax Income Tax:
Australian residents are taxed on their worldwide income, while non-residents are taxed only on their Australian-sourced income. The income tax rates are progressive, with different tax brackets for different income levels.
Income tax rates
Australia has a progressive tax system, which means that the higher your income, the more tax you pay.
Australian income tax rates for 2023–24 (residents) :
| Income thresholds | Rate | Tax payable on this income |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 19% | 19c for each $1 over $18,200 |
| $45,001 – $120,000 | 32.5% | $5,092 plus 32.5c for each $1 over $45,000 |
| $120,001 – $180,000 | 37% | $29,467 plus 37c for each $1 over $120,000 |
| $180,001 and over | 45% | $51,667 plus 45c for each $1 over $180,000 |
On 25 January 2024, the government announced changes to Individual income tax rates and thresholds from 1 July 2024.
Australian income tax rates for 2024–25 onwards (residents):
| Income thresholds | Rate | Tax payable on this income |
|---|---|---|
| $0 – $18,200 | 0% | Nil |
| $18,201 – $45,000 | 16% | 16c for each $1 over $18,200 |
| $45,001 – $135,000 | 30% | $4,288 plus 30c for each $1 over $45,000 |
| $135,001 – $190,000 | 37% | $31,288 plus 37c for each $1 over $135,000 |
| $190,001 and over | 45% | $51,638 plus 45c for each $1 over $190,000 |
*The above rates do not include the Medicare levy of 2%.
2 Lodging Tax Returns
– Individuals: Most individuals lodge their tax returns annually, covering the financial year from July 1 to June 30. The due date is generally 31 st October.
– Businesses: Businesses may have different reporting and payment obligations depending on their structure and turnover.
3 Deductions and Offsets
Australia offers various deductions and tax offsets to reduce taxable income, including work-related expenses, charitable donations, and specific offsets for low and middle-income earners.
Goods and Services Tax (GST)
GST is a value-added tax of 10% on most goods, services, and other items sold or consumed in Australia. Businesses must register for GST if they have a turnover of $75,000 or more.
Corporate Tax
Corporate tax rates vary depending on the size and type of the business:
-Base rate entities (turnover less than $50 million): 25%
-Other companies: 30%
Capital Gains Tax (CGT)
Capital gains tax applies to the profit made from the sale of assets. It is generally included in the taxpayer’s income tax return and is taxed at their marginal rate. Certain exemptions and concessions apply, such as the main residence exemption.
Fringe Benefits Tax (FBT)
FBT is paid by employers on certain benefits they provide to their employees or their employees associates. The rate is 47% on the taxable value of fringe benefits.
Other Taxes and Levies
– Excise Duties: Levied on certain goods such as alcohol, tobacco, and fuel.
– Land Tax: Applies to the value of land owned, with rates and thresholds varying by state.
– Payroll Tax: A state tax on wages paid by employers when their total wages exceed a certain threshold, which varies by state. (The rate of WA payroll tax is 5.5%)
Employers must contribute a minimum percentage of an employee’s ordinary time earnings to
a superannuation fund.
The Superannuation Guarantee (SG) rate is 11% for the 2023-2024 financial year.
From 1 July 2024, the superannuation guarantee (SG) rate is increasing from 11% to 11.5%.
Over your working years this increase can have a positive impact on the amount of super you
save and can spend in retirement. The SG has been legislated to rise incrementally each year
until it reaches 12% on 1 July 2025.