Take Advantage of Salary Sacrificing
Salary sacrificing offers a way for employees to reduce the amount of tax you must pay. To benefit, you forgo part of your pre-tax pay before you receive it. This can be used to pay for your super, a new car, insurance, computer, mortgage or rent payments and more.
The main reason Australia ranks so highly on individual income tax levels is because Australians don't pay separate social security taxes. These account for an average 25.9% of total tax revenue, or close to 9% of GDP, across the OECD.
Retirement exemption
There is a lifetime limit of $500,000 CGT exemption on the sale of an active business asset. For those who are under 55, the proceeds from the sale of the asset must be paid into a superannuation fund or retirement savings account.
This means if you've paid too much tax during the year versus your marginal tax rate, then you'll receive the extra as a credit back to your income tax account. This happens even if you opt to pay more, such as by asking your employer to withhold more or not claiming the tax-free threshold with any employers.
Telstra and retail giant Wesfarmers dropped out of the top 10 in the report released on Thursday, as BHP was revealed to be the single largest taxpayer. The company paid $7.3 billion in 2020-21, up from $4.6 billion the prior year. The company's BHP Iron Ore (Jimblebar) entity paid $2.4 billion.
Positive annual growth was recorded for all levels of government across all states and territories. Northern Territory and Victoria recorded the highest annual growths in state and local combined taxation revenue per capita (up 31.9% and 24.7% respectively, which exceeded the average of 17.3%).
Based on 2019 data and including state taxes, we are the eighth-lowest country in the OECD for tax collection relative to our economy's size, with tax revenue at 28% of GDP compared with the OECD average of 33%.
Tax-free threshold and tax rates
If you're an Australian resident, the first $18,200 you earn is tax-free. This is known as the tax-free threshold. You can claim the tax-free threshold when you complete your TFN declaration with your employer.
Salary sacrifice reduces your taxable income, so you pay less income tax. Only 15% tax is deducted from your salary sacrifice amount compared to the rate you pay on your income, which can be up to 47% (including the Medicare Levy).
If you can afford it, making extra contributions is a great way to boost your retirement savings. And it can reduce your tax. If you're on a low income, you may be eligible for extra contributions from the government.
If you make $130,000 a year living in Australia, you will be taxed $35,767. That means that your net pay will be $94,233 per year, or $7,853 per month.
The IPA State Business Tax Calculator shows that the Northern Territory, with no land taxes, has the lowest business taxes in Australia.
The Australian Capital Territory (ACT) has the highest average income among Australian states and territories, due to its strong public administration and professional services sectors. New South Wales also has a high average income, higher than the rest of the states.
Australia's maximum 47 per cent rate is 8 percentage points higher than New Zealand (39 per cent), about 5 percentage points above the US (a figure which includes an estimated average state income tax) and 2 percentage points higher than the UK.
If your taxable income was $131,501 or higher, then you earned more than 90 per cent of other Australians. If you earned more than $253,066, then you took home more than 99 per cent of taxpayers. About 5 per cent of taxpayers had incomes above $180,000.
So if you're on $100k or more, congratulations, you're in the top 20% of Aussie income earners. If not, don't worry, you're in the good company of 80% of Aussies.
The average yearly salary in Australia is 90,800 AUD (USD 60,355). Let's go through a few key indicators of the average earnings in Australia so you can fully understand salary statistics and trends in the country.
Here are just a few of the ATO's powers to ensure that tax owing is collected: Issue a garnishee notice to someone holding money on your behalf – for example a bank. For salary and wage earners, the ATO can require your employer to take part of your salary and pay it to them until your tax debt is paid.
If you make $50,000 a year living in Australia, you will be taxed $7,717. That means that your net pay will be $42,283 per year, or $3,524 per month.
We can ask them to garnishee your tax refund. This means they will withhold or give us some or all of your tax refund or available credit. If we do, we'll send you a letter to let you know.