australia_flag_perspectiveHow much income tax you pay

The amount of income tax and the tax rate you pay depends on how much you earn. The more you earn, the higher your rate of tax.

If you’re an Australian resident, the first $18,200 you earn is tax-free. This is called the tax-free threshold. If you are a foreign resident, you pay tax from the first dollar of taxable income. Read more …

Deductions you can claim

The ato.gov.au website says the when completing your tax return, you’re entitled to claim deductions for some expenses that are directly related to earning your income. You subtract these allowable deductions from your total income to arrive at your taxable income – you only pay tax on your taxable income.

The expense must not be a private, domestic or capital expense. If the expense was both work-related and private or domestic, you can only claim a deduction for the work-related portion. Read more …

Tax rates 2016-17

Taxable income

Tax on this income

0 – $18,200 Nil
$18,201 – $37,000 19% of excess over $18,200
$37,001 – $87,000** $3,572 plus 32.5% of excess over $37,000
$87,001 – $180,000 $19,822 plus 37% of excess over $87,000
$180,001 and over $54,232 plus 47% of excess over $180,000
*Excluding 2% Medicare Levy, **As announced in 2016/17 Budget but not yet enacted

Importantly, the government has confirmed that the 2% Temporary Budget Repair Levy will expire at the end of the 2017 income year, returning the effective top marginal tax rate to 45%.

Records you need to keep

During the financial year you’ll receive documents that are important for doing your tax, such as payment summaries, receipts, invoices and contracts – you should keep them, usually for 5 years.

The Australian tax system works by self-assessment – they accept the details you put on your tax return and process it. However, they can later ask you to provide the records and information you used to complete your tax return. If you can’t substantiate your claims they can: Read more …

  • disallow your claims
  • issue amended assessments increasing the tax you have to pay
  • charge you interest and penalties.


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