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Understanding the Australian Income Tax System

Tax is something that affects all of us so it is important to know the ins and outs of the Australian income tax system.

What is Income Tax?

Income tax is the most significant stream of revenue in the tax system; it consists of three main pillars:

  • Personal earnings
  • Business earnings
  • Capital gains

Income tax is applied to an individual's taxable income and is paid on all forms of income. This includes wages from your job, profits from business and returns from investments. Income tax can also apply to assets such as when a house or shares are sold.

Taxpayers with two or more jobs or other taxable income sources should be aware that they may be caught in an unintentional tax trap as a result of the tax free threshold.

Income Tax Rates

Australia has a progressive tax system, which means that the higher your income, the more tax you pay. iCalculators Australia Tax Calculator provides a good example of income tax calculations, it includes historical tax information and has the latest Australia tax tables included:

Australia Tax Tables

The following tax rates and thresholds are used directly in the Australia Tax Calculator, if you belive something is incorrect or would like to provide feedback, please contact us

Australia Income Tax Tables for 2019
Taxable IncomeTax Rate
0 to $ 0.00Nil
$ 1.00 to $ 0.00%
$ 1.00 to $ 0.00%
$ 1.00 to $ 0.00%
$ 1.00 and over%

Low Income Tax Offset

You may be eligible for a tax offset in 2019 if you are a low-income earner and you are an Australian resident for income tax purposes. If your taxable income is less than $ 66,667.00, you will get the low income tax offset. The maximum tax offset of $ 530.00 applies if your taxable income is $ 37,000.00 or less. This amount is reduced by $ 1.50 cents for each dollar over $ 37,000.00.

Medicare Levy

Medicare Levy is applies to resident Australian taxpayers, it is calculated as a percentage of taxable income subject to minimum income thresholds.

Medicare Levy for 2019
WhatTax RateThreshold
Medicare exempt0%0 to $ 22,398.00 (and those exempt)
Medicare 'Shade-in' 10%$ 22,399.00 to $ 26,668.00
Basic Medicare Levy2%$ 26,669.00 and over

Dependents

An increase to tax deductions is applied for each child claimed on the tax return:

Dependents Allowance for 2019
WhatAmount
First Child$ 1,786.00
Additional children (per child)$ 1,410.00

Superannuation

in the Australia Tax Calculator, Superannuation is simply applied at % for all earnings above $ 5,400.00 in 2019. Please contact us if you would like to have additional calculations for Superannuation factored in to this tool or wish to report any changes to the figures here or in the tables above.

Australia Tax Tables

iCalculator also includes the following tax tables, if you would like us to add additional historical years, please get in touch.

2014 Tax Tables2015 Tax Tables2016 Tax Tables2017 Tax Tables2018 Tax Tables2019 Tax Tables

'Lodging' (Filing) your Tax Return

In order to ensure the lodgment process is as smooth as possible, make sure you have all your important documents together before coming in for your appointment or lodging online. Filing away important receipts, invoices and documents throughout the year will save you a lot of time when it comes to completing your return. It's also important to ensure all your details are up to date. If you've moved or changed your name, these details need to be updated with the ATO. Minor errors like these can hold your return up for weeks or even lead to fines.

If you're retired or have access to your super fund, it is important that you are fully aware of your tax obligations. People of different ages have different levels of obligations when it comes to tax on superannuation withdrawals.

Tax Deductions

Tax deductions are expenses that you have incurred during the financial year for work purposes. Overall, tax deductions reduce taxable income and are often the reason why people get a tax refund.

Any money spent as part of your work is tax deductible. If you spent money on something to allow you to do your job you are entitled to claim that cost as a deduction. For example, travel expenses for work purposes or the cost of uniforms. If you use your personal laptop, desktop, tablet or phone for work, you can claim a deduction for work-related use of the device.

It is important to remember to only claim what you're entitled to. Private expenses or any costs that were reimbursed by your employer cannot be claimed. Claiming what you're not entitled to can lead to fines and a stressful audit by the ATO.

Further Information and Guides for Tax in Australia