Personal Income Tax in Australia: Tax Brackets and Rates, Taxable/Non-Taxable Income

Personal Income Tax in Australia: Every individual on the planet earth pays some taxes. There are several taxes we pay to the government or organisations, including service tax, income tax, corporate tax, capital gain tax, and many more. Every nation has different taxation systems, varying according to the economic condition and other factors. However, any individual must be aware of at least its national taxation system so that they don’t pay more.

Today, we’ll discuss in detail the several personal income taxes which apply to different types of individuals in Australia. Note them all or bookmark this page, the choice is yours.

Resident Income Tax in Australia

The resident tax applies to individuals who are citizens of Australia. Following are the payable taxes for different income individuals.

Income Payable Tax Tax Rate
$0 – $18,200 $0 0%
$18,201 – $37,000 19 cents for every $1 earned above income of $18,200 0% – 9.65%
$37,001 – $90,000 $3,572 + 32.5 cents for every dollar earned over $37,000 9.65% – 23.11%
$90,001 – $180,000 $20,797 + 37 cents for every dollar earned over $90,000 23.11% – 30.05%
$180,001 + $54,097 + 45 cents for every dollar earned over $180,000 30.05% – 45%

Note that these tax rates do not include low income offset* and Medicare levy charge of 2%.

Low Income Offset: LITO or low-income tax offset is a rebate provided by Australian administration to citizens with lower income. The LITO is $445 until a person’s income reaches above $37,000. The rebate is above the general threshold of $18,200 and is operating since 2015-2016.

Further, the low-income tax offset (LITO) is then decreased to 1.5 cents for every dollar earned above $37,000 but below $66,666. After the maximum threshold, the tax rebate is not provided and is used to decrease a person’s taxable income liability.

Income Tax For Minors/Individual Below 18 Years

If a minor or an individual below 18 years is earning a significant amount, then the income is taxable as per Australian tax authority. The payable tax for different categories are as follows:

Income Payable Tax Tax Rate
$0 – $417 $0 0%
$417 – $1307 65 cents for every dollar earned above $416 0-45%
$1308 + 45% of whole income 45%

Note that the income doesn’t include inherited income from parents or employment earnings.

Non-Resident Personal Income Tax

Apart from taxes on residents of Australia, people who are living in Australia but are not residents of the nation are also required to pay income tax. Following are the details:

Income Payable Tax Effective Tax Rate
0 – $90,000 32.5 cents for every dollar earned 32.5%
$90,001 – $180,000 $29,250 + 37 cents for every dollar earned above $90,000 32.5% – 34.8%
$180,001+ $62,550 + 45 cents for every dollar earned above $180,000 34.8% – 45%

Note that the non-residents are not eligible to apply for rebates under LITO nor Medicare levy charges are implied upon them.

Income Tax For Working Holiday Makers

Working holiday makers are those individuals who are living in Australia on the following visa class:

  • Working holiday visa (417)
  • Work & Holiday visa (462)

Here are the details about taxes on working holidaymakers:

Income Payable Tax
$0 – $37,000 15 cents for every dollar earned
$37,001 – $90,000 $5,550 + 32.5 cents for every dollar earned above $37,000
$90,001 – $180,000 $22,775 + 37 cents for every dollar earned above $90,000
$180,001 + $56,075 + 45 cents for every dollar earned above $180,000

So, these were the necessary personal income taxation details for different individuals. However, not every income one earns is taxable; many are not included in the above category.

Taxable & Non-Taxable Income

Income Taxable by Australian Authorities

  • Pensions and annuities
  • Most government payments
  • Employment
  • Investments
  • Foreign income
  • Capital gains
  • Income from trusts, partnerships or businesses

Income not taxable by the Australian administration

  • Lottery winnings and other prizes
  • Some government payments
  • Tax-free portion of your redundancy payment
  • Small gifts or birthday presents
  • Child support
  • Government super co-contributions

If there are still any doubts left, then navigate to the Australian Tax Office’s official website.

Note that a resident of Australia is liable to pay taxes on both national and international incomes, i.e. earnings from local as well as overseas sources. However, a non-resident is liable only to pay taxes on earnings from Australian sources only.

Conclusion

So, this was all about the Australian tax system. Mark your category and consult a financial adviser to get more ideas on it. Do not pay any tax which does not fall above you. There are frauds which are working on eating your money. Read on the internet before the transaction or processing any payment.

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