Australian Average 2009 tax rates

Income Tax

Tax rates 2008-09

Ok so – I earn $60,000 x 30% tax rate = I pay $18,000 tax – right?? (No! this is wrong!).  Individual tax rates are a MARGINAL system – on the first $6,000 you pay nothing, then 15% for the next amount, etc.

 

Below is the (CRAP!) ATO tax table telling how to work out how much you are taxed.

Taxable income Tax on this income
$1 – $6,000 Nil
$6,001 – $34,000 15c for each $1 over $6,000

 

$34,001 – $80,000 $4,200 plus 30c for each $1 over $34,000

 

$80,001 – $180,000 $18,000 plus 40c for each $1 over $80,000

 

$180,001 and over $58,000 plus 45c for each $1 over $180,000

 

             

 So if you earn $60,000 you will pay $12,000 tax. Now if you divide tax by taxable income $60,000 you get 20%. So the average rate of tax you actually pay is 20%. (although obviously any dollar$ you earn over $60,000 you will pay 30c tax until $80,000 then 40c, etc.). The (WAY BETTER!) table below shows how this works: 

1 2 1 divided by 2 % tax on extra $
Taxable Income Tax Average Rate Marginal rate
6,000 0 0.0% 0.0%
10,000 600 6.0% 15.0%
15,000 1,350 9.0% 15.0%
25,000 2,850 11.4% 15.0%
34,000 4,200 12.4% 30.0%
40,000 6,000 15.0% 30.0%
50,000 9,000 18.0% 30.0%
60,000 12,000 20.0% 30.0%
80,000 18,000 22.5% 40.0%
150,000 46,000 30.7% 40.0%
180,000 58,000 32.2% 45.0%
250,000 94,500 37.8% 45.0%
500,000 207,000 41.4% 45.0%

 Now if you earned $50,000 this year you can tell your friends that you paid 18% tax (and have them telling you that you are wrong!).

Posted in Tax Tagged with: , , , , , ,
  • bt

    Your ‘way better table’ is rubbish. if you want a good table it should also take into account the Medicare levy and the low income tax offset at the very least.
    Of course it’s the government’s fault for not abolishing both things and adjusting the marginal rates accordingly. How about a tax free threshold of 17K and tax rates of 16.5%, 31.5%, 42.5% and 47.5%. That would more accurately reflect what we’re paying now and cut out layers of complexity at the same time.

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