Personal Australian Tax Rates

2018 Tax Rates Explained

With five different income brackets, the Medicare levy, the low income offset and hundreds of pages of tax laws, understanding personal Australian tax rates can be difficult.

There are some rules that take many taxpayers by surprise.

For example, you should know that the ATO classifies any interest you earn from savings or investments counts as part of your income.

The ATO tax rate applied to your income will vary, depending on your ‘annual taxable income’. This means money earned from employment plus other forms of income such as interest.

Australian Tax Rates for 2018 (2017-2018 tax year)

We’ve summarised Australian Tax rates for the 2017-2018 tax season below. Take a look to see which income band you are likely to be classified under.

• $0-$18,200 = Nil tax

• $18,201 – $37,000 = 19c for each $1 over $18,200

• $37,001-$87,000 = $3,572 plus 32.5c for each $1 over $37,000

• $87,001-$180,000 = $19,822 plus 37c for each $1 over $87,000

• $180,001 and over =  $54,232 plus 45c for each $1 over $180,000

While the above tax rates give you a rough idea of the amount of tax you will pay each year, you should be aware that the Medicare Levy and the Low Income Tax Offset also affect your tax payable.

Medicare Levy

There are some exemptions but in general, Australian tax residents pay a Medicare levy, which is calculated at a flat rate of 2% of a taxpayer’s taxable income over a certain level.

At time of writing the ATO stated:

• You do not have to pay the Medicare levy if your taxable income is equal to or less than $21,655 ($34,244 for seniors and pensioners entitled to the seniors and pensioners tax offset).
• You will pay only part of the Medicare levy if your taxable income is between $21,655 and $27,068 ($34,244 and $42,805 for seniors and pensioners entitled to the seniors and pensioners tax offset).
• If you are single with no dependants and your taxable income is over $27,069 ($42,806 for seniors and pensioners entitled to the seniors and pensioners tax offset), you do not qualify for a Medicare levy reduction.

Low Income Tax Offset

As well as there being no tax on the first $18,200 there is also a low income tax offset.

The maximum value of the low-income tax offset is $445, with the reduction rate being decreased by 1.5 cents for each dollar of taxable income over $37,000.  If your income exceeds $66,667, no offset is available.

See below:

• $0 – $37,000 =  $445

• $37,001 – $66,666 = $445 less 1.5% of excess over $37,000

• $66,667 and above = Nil

Taxation and calculating your Australian tax rates can be quite confusing. At Etax Local Accountants our aim is to take this confusion out of the equation. Our highly qualified accountants are very knowledgeable on all aspects of taxation in Australia and will make doing your taxes as easy as possible.

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