Comasters Law Firm and Notary Public | Tax Rates (2018-2019 and beyond)
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Tax Rates (2018-2019 and beyond)

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Australia has a progressive taxation system. This means that as income increases, the tax rate and the amount of tax also increases. In order to implement this system, income brackets are taxed at a set percentage. Rate of tax within these brackets are called the marginal rate of tax. In Australia, a tax-free threshold applies to income falling within the $0 to $18,200 bracket. This means that if a person earns below $18,201, they have a zero marginal rate of tax and therefore no tax has to be paid on such earnings.

 

Residents and Non-Residents

Before discussing the actual tax rates, it is appropriate to set out two categories under which different tax rates apply.

 

Resident category

These tax rates apply to residents of Australia. A person is considered to be resident of Australia for taxation purposes if they have:

  • Always lived in Australia;
  • Come to Australia to live permanently; or
  • Been in Australia for more than half of a financial year.

 

One will not be considered a resident for tax purposes if they leave Australia permanently or are holidaying in Australia or visiting for less than six months. Residency for tax purposes is determined separately and independently each financial year. Therefore, even if you are a resident one year, this does not necessarily mean that you will be deemed a resident in the next financial year.

 

Non-Resident category

If you are a non-resident of Australia (for tax purposes), tax is only payable on income that is earned in Australia. The main effects of being a non-resident are as follows:

  • There is no tax free threshold; i.e. all salary and wage income earned in Australia is taxable.
  • No requirement to pay the Medicare levy (non-residents do not receive the benefits of Medicare).
  • There is a requirement to show Australian rental income in your tax return.
  • Tax is withheld from unfranked dividends.

 

Tax Offsets

Tax offsets reduce the amount of tax payable. Tax offsets apply to three main categories:

1. Senior Australians;

2. Individuals on low incomes; and

3. Individuals who receive certain Australian government allowances and payments.

 

Income Tax Rate

 

(A) RESIDENTS

TAX RATES: 2018-2019

Taxable Income Tax on this Income
$0—$18,200 0
$18,201—$37,000 19%
$37,001—$90,000 $3,572 + 32.5c for each $1 over $37,000
$90,001—$180,000 $20,797 + 37c for each $1 over  $90,000
$180,001 + $54,097 + 45c for each $1 over  $180,000

The above rates does not include:

  • Medical Levy of 2%
  • Temporary Budget Repair Levy 2% (payable for income over  $180,000)

 

(B) NON-RESIDENTS

TAX RATES: 2018-2019

Taxable Income Tax on this Income
$0—$90,000 32.5%
$90,001—$180,000 $29,250 + 37c for each $1 over $87,000
$180,001 + $62,550 + 45c for each $1 over $180,000

The above rates does not include:

  • Temporary Budget Repair Levy 2% (payable for income over  $180,000)

 

Income Tax Rates

To view Resident and Non-resident tax rates for 2019-2020, please view the PDF version of this article.

 

Superannuation Guarantee Rate (Retirement Savings Rate)

The superannuation guarantee rate for 2018-2019 is 9.5%. It will increase to 10% by 2021-2022.

 

Goods and Services Tax Rate

For the years 2018-2019 and beyond, the Goods and Services tax rate is 10%.

© Comasters December 2016 (first published July 2014).

 

Important: This is not advice. Clients should not act solely on the basis of the material contained in this paper. Our formal advice should be sought before acting on any aspect of the above information.