Tax Brackets in Australia

what are the tax brackets in australia

What are the income tax brackets in Australia?

The table below shows you the marginal tax rates for each of the income brackets. You can see how the rates increase as income increases. At the end of each financial year, you tell the Tax Office how much taxable income you have earned for the year and we assess how much tax you need to pay on that income, using the rates below.

Here are the tax rates for the 2008-09 financial year for Australian residents for tax purposes. These rates apply from 1 July 2008:

$1 – $6,000 Nil

$6,001 – $34,000 15% for each dollar over $6,000

$34,001- $80,000 $4,200 + 30% for each dollar over $34,000

$80,001 – $180,000 $18,000 + 40% for each dollar over $80,000

$180,000+ $58,000 + 45% for each dollar over $180,000

The first $6,000 you earn in an income year is tax-free. This is called the tax-free threshold.

What is bracket Creep

Bracket creep is an economic phenomenon that occurs when people experience an increase in wages, salary, or

other income that moves the individual from one tax bracket to the next highest bracket. Generally, bracket creep occurs when an employer issues cost of living or merit raises during the calendar year, resulting in enough additional revenue to move the employee into a different bracket.

Bracket creep is usually concerned with the overall income level of the household. This means that any taxable income earned by the occupants of the household will be factored into the total amount of generated revenue or income for the tax period. Along with wages and salary from a main job, other sources of income can also add to the potential for bracket creep. Second jobs, investment earnings, and interest on savings and other types of bank accounts can all combine to create the incidence of bracket creep.

If you would like more information about the way that tax brackets work in Australia, please do not hesitate to contact us.

Legal Resources

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Source: www.legallawyers.com.au

Category: Taxes

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