What Are The Tax Thresholds In Australia?

 

If you are earning an income while in Australia or even from abroad, you are entitled to pay tax to the Australian government. The income tax depends on the amount of income you are making. The tax thresholds vary and are influenced by many factors that we are going to discuss in this article.

At the end of each financial year you are required to file a tax return as an individual or a business and submit it to the government website in which you earned an income in that year.  You may have to pay additional tax if you have not paid enough throughout the year, or you may be entitled to a tax refund if you have paid more tax than required.

Income Tax in Australia (AU)

This is the type of tax paid to the AU Government on all the income earned in a year. The tax is calculated depending on the amount of money you earn within a financial year. If you are an employee, the tax is filed by your employer. If you are self-employed, you need to ensure that you set the tax money aside and pay it by yourself.
 
The main reason why we pay income tax is; the government attains its revenue from taxes which is then used to reinvest in infrastructure, social security programs and other public services such as education, defence and health.

How Much Should I Pay?

The amount you pay is calculated based on various factors. The current tax bracket and rates will determine how much you need to pay. The following is the current individual income tax and rates in Australia.

Total taxable income	Tax rate
$0 – $18,200	No tax
$18,201 – $45,000	19c for each $1 over $18,200
$45,001 – $120,000	$5,092 plus 32.5c for each $1 over $45,000
$120,001 – $180,000	$29,467 plus 37c for each $1 over $120,000
$180,001 and over	$51,667 plus 45c for each $1 over $180,000

The income threshold table will help you to calculate the tax amount that you are supposed to pay in a financial year. As an employee, it is also important to make sure that you check whether your employer has been filing the current amount of tax to remain compliant.

Foreign Resident Income Tax Bracket

Taxable income	Tax rate and bracket
$0 – $120,000	32.5c for each $1
$120,001 – $180,000	$39,000 plus 37c for each $1 over $120,000
$180,001 and over	$61,200 plus 45c for each $1 over $180,000

There are many more complex rules and regulations surrounding tax which you should be aware of. It can often be overwhelming and confusing for both individuals and businesses to figure out alone. For help on the tax-related matter or to find a bookkeeper near you contact Shoebox Book today.

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