Tax Rates
Individuals
In Australia, a taxpayer's income is taxed progressively. Broadly, this means that as you earn more income your average tax rate rises.
Residents
These rates apply to individuals who:
- are residents of Australia for tax purposes for the whole financial year and
- did not leave full-time education for the first time during the financial year.
Rates of Tax – 2007/08 Resident Individuals
Taxable Income |
Tax Payable |
0 - 6,000 |
Nil |
6,001 – 30,000 |
15% of excess over $6,000 |
30,001 – 75,000 |
$3,600 + 30% of excess over $30,000 |
75,001 – 150,000 |
$17,100 + 40% of excess over $75,000 |
Rates of Tax – 2008/09
Taxable Income $ |
Rate (%) |
Tax Payable |
0 – 6,000 |
0 |
Nil tax payable |
6,001 – 34,000 |
15 |
15c for each $1 over $6,000 |
34,001 – 80,000 |
30 |
$4,200 plus 30c for each $1 over $34,000 |
80,001 – 180,000 |
40 |
$18,000 plus 40c for each $1 over $80,000 |
180,001 & above |
45 |
$58,000 plus 45c for each $1 over $180,000 |
Rates of Tax – 2009/10
Taxable income $ |
Rate (%) |
Tax Payable |
0 – 6,000 |
0 |
Nil tax payable |
6,001 – 35,000 |
15 |
15c for each $1 over $6,000 |
35,001 – 80,000 |
30 |
$4,350 plus 30c for each $1 over $35,000 |
80,001 – 180,000 |
38 |
$17,850 plus 38c for each $1 over $80,000 |
180,001 & above |
45 |
$55,850 plus 45c for each $1 over $180,000 |
NOTE: The tax-free threshold may effectively be higher for taxpayers eligible for the low-income tax offset, the Senior Australians Tax Offset and / or certain other tax offsets.
The above rates do not include the Medicare Levy of 1.5%.
Other Rates
Medicare Levy
The Medicare levy rate is 1.5% of taxable income. There is no ceiling on the amount of levy payable. However there are low income thresholds at which no levy will apply.
Medicare Levy Surcharge
Where a taxpayer and their spouse and dependents are not covered by private health insurance, a 1% Medicare levy surcharge can apply where their single or combined income exceeds the thresholds.
Thresholds for determining liability for surcharge (not covered by appropriate private health insurance):
No. of dependent children or students |
Single |
Family |
0 |
$50,000 |
$100,000 |
1 |
$100,000 |
$100,000 |
2 |
$101,500 |
$101,500 |
Each extra child |
$1,500 |
$1,500 |
Your insurance company will provide a statement with the number of days you are not liable for the surcharge.
Higher Education Loan Program (HELP)
From 1 January 2005, HECS is replaced with a new scheme known as HELP. If you have an accumulated HECS or HELP debt, the following repayment rates are applicable for :
2007 – 2008 Repayment Rates:
Rate |
HELP Repayment
Income |
Nil |
0 – 39,824 |
4 |
39,825 – 44,360 |
4.5 |
44,361 – 48,896 |
5 |
48,897 – 51,466 |
5.5 |
51,467 – 55,322 |
6 |
55,323 – 59,915 |
6.5 |
59,916 – 63,068 |
7 |
63,069 – 69,405 |
7.5 |
69,406 – 73,959 |
8 |
73,960+ |
NOTE: ‘HELP repayment income’ is the sum of the taxpayer’s taxable income plus any net rental losses, total reportable fringe benefits amounts and any exempt foreign employment income.
Tax Offsets
Tax offsets help reduce your ultimate
tax liability. Some of the common offsets are explained below:
Medical Expense Tax Offset
- Rebate for medical expenses incurred in excess of $1,500.
- Calculated at 20% of the excess over $1,500.
- Does not include purely cosmetic procedures.
- Only includes ‘out-of-pocket’ expenditure i.e. non-reimbursed expenditure.
Low Income Tax Offset
- Maximum rebate of $750 reduced by 4% for every dollar over $25,000
- Does not apply if your taxable income is $40,000 and above.
Private Health Insurance Tax Offset
- The amount of the tax offset is generally 30% of the amount paid for health insurance cover for the income year.
- You can receive the benefit as either a reduction in premiums paid or as a tax offset.
- Your insurance company will provide a statement with your entitlement.
- Can reduce or eliminate the Medicare Surcharge of 1% (See our tax tips section for more information).
Other tax offests apply to people with dependants, those living in remote areas and those who receive particular types of income or incur particular expenses.
Partnership
A partnership that is carrying on
a business must show in a Partnership
Tax Return all it's income earned and deductions claimed for expenses
in the course of carrying on business.
Each partner pays tax on their share of the partnership's income, and thus must
include their individual share of the net partnership profit or loss in their
personal tax return.
Instructions are available at the ATO website www.ato.gov.au.
Company
A company is a distinct legal entity, with it's own income tax liability, and must complete a Company Tax Return. A company's income tax is calculated as a percentage of the taxable income the company earned during the financial year. The company tax rate is 30 percent.
The amount of tax to be paid is reduced by any PAYG instalments payable during the year.
Instructions are available at the ATO website. www.ato.gov.au
Superannuation
Superannuation and Deductions (Self-employed or substantially self-employed)
Amount of contribution |
Maximum deduction 2006 |
0 – 50,000 (under 50yrs) |
50,000 |
0 – 100,000 (over 50yrs) |
100,000 |
Government Co-contribution
Total Income |
Maximum Co-contribution |
0 – 29,000 |
1,500 |
29,000 – 59,000 |
1,500 – (5% x (Total income - $29,000)) |
59,000 and above |
Nil |
Please use the Tax Office’s calculator available HERE.
Fringe Benefits Tax
Car Benefits – Statutory Formula
For car benefits, rather than using the operating cost method (which requires a log book), taxpayers can choose to use the statutory formula which is effectively based on the number of business and private kilometers travelled in a year. The rates are as follows:
Annualised Number of Kilometres |
Rate |
Less than 15,000 |
26% |
15,000 to 24,999 |
20% |
25,000 to 40,000 |
11% |
More than 40,000 |
7% |
For more information or assistance on Fringe Benefits Tax (FBT), please contact our office.
Depreciation Rates
The rate of depreciation in most cases is determined by the assets effective life. There are generally two methods available for calculating the rate of depreciation.
The ‘Prime Cost’ method offers straight line or uniformed depreciation over the life of the asset.
The ‘Diminishing Value’ method offers greater depreciation in earlier years.
A taxpayer in most cases can self-assess the asset’s effective life. Although the preferred method, known as the ‘safe harbor’ approach is to rely on the Commissioner’s determination of effective life. These determinations are found in Taxation Ruling TR 2000/18.
For a comparison of the methods:
Car Purchased 1/7/2004 Cost $45,000
Diminishing Value & Prime Cost Compared:
Diminishing Value Method |
Prime Cost Method |
|
|
Depreciation can be a complex area of tax law. For more information please contact our office.