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Personal Income Tax

income-taxWhen you get a job in Australia, you must pay income tax. The amount of tax you pay will depend on how much money you earn. High income earners pay more tax than people on a low income. On addition, you may be taxed on any income you receive from your country of origin.


Included in the income tax you pay is a 1.5% Medicare levy – to cover your health care. In some years, additional fees will also apply as required (such as the 2010-2011 Queensland floods levy).

The end of financial year in Australia is June 30. After this date, you are required to submit a tax return, which allows the Australian Taxation Office (ATO) to calculate how much tax you owe.  Generally, the company you work for is responsible to work out how much tax you should pay based on your salary, and then to withhold tax based in each pay period. Most Australians are paid every 2 weeks, and some once a month.

Tax brackets

In order to offset the new Clean Energy Future initiative (carbon tax) stared in July  2012, the government has increased the tax-free threshold from $6,000 to $18,200, with the highest tax rate for individuals being 45%.

These are the tax brackets for the 2012/13 tax year:

0 – $18,200 = $0.00

$18,201 – $37,000 = 19c for each $1 over $18,200.00

$37,001 – $80,000 = $3,572 plus 32.5c for each $1 over $37,000.00

$80,001 – $180,000 = $17,547 plus 37c for each $1 over $80,000.00

$180,001 and over = $54,547 plus 45c for each $1 over $180,000.00


The government also provides a handy income tax calculator.

Tax Return

You can complete your tax return yourself, or pay a professional accountant or tax agent to do it for you. Professionals can generally find ways to reduce your tax bill that you may not be able to find yourself, especially if you are not familiar with the Australian taxation system.

If you are lucky, the amount of tax that the ATO requires employers to take out of your pay can exceed your total tax bill, you might receive a tax refund at the end of financial year. However, under certain circumstances you might unfortunately have to pay additional tax.

Some tax payers, such as international students are on a different tax rate scale. Non-residents will taxed at a higher rate, and do not receive a tax-free threshold.

For more detailed information on tax in Australia, please visit the ATO website.