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Individual income tax rates and how the individual gets taxed on his or her taxable income

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27
Apr

Individual income tax rates

The individual income tax rate is a rate that calculates the amount of tax you need to pay on your income. These tax rates will depend on your income year and your residency status for income tax purposes. It also depends on how much you earn.

Australia uses a descending scale of tax. Following are the individual income tax rates for 2015-16. These rates are applicable for the individuals who are Australian residents.

Taxable Income

Tax On This Income

0 to $18,200

Nil

$18,201 to $37,000

19c for each $1 over $18,200

$37,001 to $80,000

$3,572 plus 32.5c for each $1 over $37,000

$80,001 to $180,000

$17,547 plus 37c for each $1 over $80,000

$180,001 and over

$54,547 plus 45c for each $1 over $180,000

 

The above rates do not include Medicare Levy of 2% and the Temporary Budget Repair Levy which is payable at a rate of 2% for taxable incomes over $180,000.

There will be another rate applicable, if you are a foreign resident for the full year. Following are the tax rates for foreign residents, 2015-16.

Taxable Income

Tax On This Income

0 to $80,000

32.5c for each $1

$80,001 to $180,000

$26,000 plus 37c for each $1 over $80,000

$180,001 and over

$63,000 plus 45c for each $1 over $180,000

 

These rates do not include the Temporary Budget Repair Levy which is payable at a rate of 2% for taxable incomes over $180,000.

How the individual gets taxed on his or her taxable income

Anyone who earns money from his or her work or from investment needs to pay tax. So it's very important to know exactly how your tax is calculated and how much tax you can expect to pay.

There are some steps below showing how an individual gets taxed on his or her taxable income.

  • Firstly, you need to identify your Assessable Income which can be taxed;
  • The expenses that are directly related to earning your assessable income will be deducted from your assessable income;
  • After deduction, there will be taxable income on which tax payable amount is calculated with the tax rates;
  • The Net Tax Payable is determined after any tax offsets which directly reduce the amount of tax payable on your taxable income;
  • There are some other factors that will be adjusted with the Net Tax Payable like Help and SFSS Repayments, Medicare Levy and Surcharge, and Tax Credits and Refundable Tax Offsets.

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