Income tax in Australia


Income tax in Australia is imposed by the federal government on the taxable income of individuals and corporations. State governments have not imposed income taxes since World War II. On individuals, income tax is levied at progressive rates, and at one of two rates for corporations. The income of partnerships and trusts is not taxed directly, but is taxed on its distribution to the partners or beneficiaries. Income tax is the most important source of revenue for government within the Australian taxation system. Income tax is collected on behalf of the federal government by the Australian Taxation Office.
The two statutes under which income tax is calculated are the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997; the former is gradually being re-written into the latter. Taxable income is the difference between assessable income and allowable deductions. There are three main types of assessable income for individual taxpayers: personal earnings, business income and capital gains. Taxable income of individuals is taxed at progressive rates from 0 to 45%, plus a Medicare levy of 2%, while income derived by companies is taxed at either 30% or 25% depending on annual turnover, but is subject to dividend imputation. Generally, capital gains are only subject to tax at the time the gain is realised and are reduced by 50% if the capital asset sold was held for more than one year.
In Australia the financial year runs from 1 July to 30 June of the following year.

History

The first income tax in Australia was imposed in 1884 by South Australia with a general tax on income.
Federal income tax was first introduced in 1915, as a wartime measure to help fund Australia's war effort in the First World War. Between 1915 and 1942, income taxes were levied by both State governments and the federal government. In 1942, to help fund World War II, the federal government took over the raising of all income tax, to the exclusion of the States. The loss of the states' ability to raise revenue by income taxation was offset by federal government grants to the states and, later, the devolution of the power to levy payroll taxes to the states in 1971.
In 1951, the top marginal tax rate for incomes above £10,000 was 75 per cent. From 1955 until the mid-1980s the top marginal tax rate was 67 per cent.

Historical personal income tax rates and brackets

The following historical personal income tax rates and brackets since 1983 are sourced from the ATO. These rates do not include the Medicare levy. Income tax brackets in Australia are not typically indexed against inflation.
Taxable incomeTax on this incomeEffective tax rate
$1 – $4,594Nil0%
$4,595 – $19,49930c for each $1 over $4,5950 – 22.93%
$19,500 – $35,787$4,471.50 plus 46c for each $1 over $19,50022.93 – 33.43%
$35,788 and over$11,963.98 plus 60c for each $1 over $35,78833.43 – less than 60%

Taxable incomeTax on this incomeEffective tax rate
$1 – $4,594Nil0%
$4,595 – $12,49926.67 cents for each $1 over $4,5950 – 16.87%
$12,500 – $19,499$2,108.26 plus 30 cents for each $1 over $12,50016.87 – 21.58%
$19,500 – $27,999$4,208.26 plus 46 cents for each $1 over $19,50021.58 – 28.99%
$28,000 – $34,999$8,118.26 plus 47.33 cents for each $1 over $28,00028.99 – 32.66%
$35,000 – $35,787$11,431.36 plus 55.33 cents for each $1 over $35,00032.66 – 33.16%
$35,788 and over$11,867.36 plus 60 cents for each $1 over $35,78833.16 – less than 60%

Taxable incomeTax on this incomeEffective tax rate
$1 – $4,594Nil0%
$4,595 – $12,49925 cents for each $1 over $4,5950 – 15.81%
$12,500 – $19,499$1,976.26 plus 30 cents for each $1 over $12,50015.81 – 20.90%
$19,500 – $27,999$4,076.25 plus 46 cents for each $1 over $19,50020.90 – 28.52%
$28,000 – $34,999$7,986.25 plus 48 cents for each $1 over $28,00028.52 – 32.42%
$35,000 and over$11,346.25 plus 60 cents for each $1 over $35,00032.42 – less than 60%

Taxable incomeTax on this incomeEffective tax rate
$1 – $4,889Nil0%
$4,890 – $12,49924.42 cents for each $1 over $4,8900 – 14.87%
$12,500 – $12,599$1,858.36 plus 26.50 cents for each $1 over $12,50014.87 – 14.96%
$12,600 – $19,499$1,884.86 plus 29.42 cents for each $1 over $12,60014.96 – 20.08%
$19,500 – $27,999$3,914.84 plus 44.25 cents for each $1 over $19,50020.08 – 27.41%
$28,000 – $34,999$7,676.09 plus 46.83 cents for each $1 over $28,00027.41 – 31.30%
$35,000 and over$10,954.19 plus 57.08 cents for each $1 over $35,00031.30 – less than 57.08%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,100Nil0%
$5,101 – $12,60024 cents for each $1 over $5,1000 – 14.28%
$12,601 – $19,500$1,800 plus 29 cents for each $1 over $12,60014.28 – 19.49%
$19,501 – $35,000$3,801 plus 40 cents for each $1 over $19,50019.49 – 28.57%
$35,001 and over$10,001 plus 49 cents for each $1 over $35,00028.57 – less than 49%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,100Nil0%
$5,101 – $12,60024 cents for each $1 over $5,1000 – 14.28%
$12,601 – $19,500$1,800 plus 29 cents for each $1 over $12,60014.28 – 19.49%
$19,501 – $35,000$3,801 plus 40 cents for each $1 over $19,50019.49 – 28.57%
$35,001 and over$10,001 plus 49 cents for each $1 over $35,00028.57 – less than 49%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,099Nil0%
$5,100 – $17,64921 cents for each $1 over $5,1000 – 14.93%
$17,650 – $20,599$2,635.50 plus 29 cents for each $1 over $17,65014.93 – 16.95%
$20,600 – $34,999$3,491 plus 39 cents for each $1 over $20,60016.95 – 26.02%
$35,000 – $49,999$9,107 plus 47 cents for each $1 over $35,00026.02 – 32.31%
$50,000 and over$16,157 plus 48 cents for each $1 over $50,00032.31 – less than 48%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,249Nil0%
$5,250 – $17,64920.5 cents for each $1 over $5,2500 – 14.40%
$17,650 – $20,599$2,542 plus 24.5 cents for each $1 over $17,65014.40 – 15.85%
$20,600 – $20,699$3,264.75 plus 29.5 cents for each $1 over $20,60015.85 – 15.91%
$20,700 – $34,999$3,294.25 plus 38.5 cents for each $1 over $20,70015.91 – 25.14%
$35,000 – 35,999$8,799.75 plus 42.5 cents for each $1 over $35,00025.14 – 25.62%
$36,000 – 49,999$9,224.75 plus 46.5 cents for each $1 over $36,00025.62 – 31.47%
$50,000 and over$15,734.75 plus 47 cents for each $1 over $50,00031.47 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,400Nil0%
$5,401 – $20,70020 cents for each $1 over $5,4000 – 14.78%
$20,701 – $36,000$3,060 plus 38 cents for each $1 over $20,70014.78 – 24.65%
$36,001 – $50,000$8,874 plus 46 cents for each $1 over $36,00024.65 – 30.63%
$50,000 and over$15,314 plus 47 cents for each $1 over $50,00030.63 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,400Nil0%
$5,401 – $20,70020 cents for each $1 over $5,4000 – 14.78%
$20,701 – $36,000$3,060 plus 38 cents for each $1 over $20,70014.78 – 24.65%
$36,001 – $50,000$8,874 plus 46 cents for each $1 over $36,00024.65 – 30.63%
$50,000 and over$15,314 plus 47 cents for each $1 over $50,00030.63 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,400Nil0%
$5,401 – $20,70020 cents for each $1 over $5,4000 – 14.78%
$20,701 – $36,000$3,060 plus 35.5 cents for each $1 over $20,70014.78 – 23.59%
$36,001 – $38,000$8,491.50 plus 38.5 cents for each $1 over $36,00023.59 – 24.37%
$38,001 – $50,000$9,261.50 plus 44.125 cents for each $1 over $38,00024.37 – 29.11%
$50,001 and over$14,556.50 plus 47 cents for each $1 over $50,00029.11 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,400Nil0%
$5,401 – $20,70020 cents for each $1 over $5,4000 – 14.78%
$20,701 – $38,000$3,060 plus 34 cents for each $1 over $20,70014.78 – 23.53%
$38,001 – $50,000$8,942 plus 43 cents for each $1 over $38,00023.53 – 28.20%
$50,001 and over$14,102 plus 47 cents for each $1 over $50,00028.20 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,400Nil0%
$5,401 – $20,70020 cents for each $1 over $5,4000 – 14.78%
$20,701 – $38,000$3,060 plus 34 cents for each $1 over $20,70014.78 – 23.53%
$38,001 – $50,000$8,942 plus 43 cents for each $1 over $38,00023.53 – 28.20%
$50,001 and over$14,102 plus 47 cents for each $1 over $50,00028.20 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,400Nil0%
$5,401 – $20,70020 cents for each $1 over $5,4000 – 14.78%
$20,701 – $38,000$3,060 plus 34 cents for each $1 over $20,70014.78 – 23.53%
$38,001 – $50,000$8,942 plus 43 cents for each $1 over $38,00023.53 – 28.20%
$50,001 and over$14,102 plus 47 cents for each $1 over $50,00028.20 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,400Nil0%
$5,401 – $20,70020 cents for each $1 over $5,4000 – 14.78%
$20,701 – $38,000$3,060 plus 34 cents for each $1 over $20,70014.78 – 23.53%
$38,001 – $50,000$8,942 plus 43 cents for each $1 over $38,00023.53 – 28.20%
$50,001 and over$14,102 plus 47 cents for each $1 over $50,00028.20 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,400Nil0%
$5,401 – $20,70020 cents for each $1 over $5,4000 – 14.78%
$20,701 – $38,000$3,060 plus 34 cents for each $1 over $20,70014.78 – 23.53%
$38,001 – $50,000$8,942 plus 43 cents for each $1 over $38,00023.53 – 28.20%
$50,001 and over$14,102 plus 47 cents for each $1 over $50,00028.20 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $5,400Nil0%
$5,401 – $20,70020 cents for each $1 over $5,4000 – 14.78%
$20,701 – $38,000$3,060 plus 34 cents for each $1 over $20,70014.78 – 23.53%
$38,001 – $50,000$8,942 plus 43 cents for each $1 over $38,00023.53 – 28.20%
$50,001 and over$14,102 plus 47 cents for each $1 over $50,00028.20 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $20,00017 cents for each $1 over $6,0000 – 11.9%
$20,001 – $50,000$2,380 plus 30 cents for each $1 over $20,00011.9 – 22.76%
$50,001 – $60,000$11,380 plus 42 cents for each $1 over $50,00022.76 – 25.97%
$60,001 and over$15,580 plus 47 cents for each $1 over $60,00025.97 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $20,00017 cents for each $1 over $6,0000 – 11.9%
$20,001 – $50,000$2,380 plus 30 cents for each $1 over $20,00011.9 – 22.76%
$50,001 – $60,000$11,380 plus 42 cents for each $1 over $50,00022.76 – 25.97%
$60,001 and over$15,580 plus 47 cents for each $1 over $60,00025.97 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $20,00017 cents for each $1 over $6,0000 – 11.9%
$20,001 – $50,000$2,380 plus 30 cents for each $1 over $20,00011.9 – 22.76%
$50,001 – $60,000$11,380 plus 42 cents for each $1 over $50,00022.76 – 25.97%
$60,001 and over$15,580 plus 47 cents for each $1 over $60,00025.97 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $21,60017 cents for each $1 over $6,0000 – 12.28%
$21,601 – $52,000$2,652 plus 30 cents for each $1 over $21,60012.28 – 22.64%
$52,001 – $62,500$11,772 plus 42 cents for each $1 over $52,00022.64 – 25.89%
$62,501 and over$16,182 plus 47 cents for each $1 over $62,50025.89 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $21,60017 cents for each $1 over $6,0000 – 12.28%
$21,601 – $58,000$2,652 plus 30 cents for each $1 over $21,60012.28 – 23.4%
$58,001 – $70,000$13,572 plus 42 cents for each $1 over $58,00023.4 – 26.59%
$70,000 and over$18,612 plus 47 cents for each $1 over $70,00026.59 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $21,60015c for each $1 over $6,0000 – 10.83%
$21,601 – $63,000$2,340 plus 30c for each $1 over $21,60010.83 – 23.43%
$63,001 – $95,000$14,760 plus 42c for each $1 over $63,00023.43 – 29.68%
$95,000 and over$28,200 plus 47c for each $1 over $95,00029.68 – less than 47%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $25,00015c for each $1 over $6,0000 – 11.40%
$25,001 – $75,000$2,850 plus 30c for each $1 over $25,00011.40 – 23.80%
$75,001 – $150,000$17,850 plus 40c for each $1 over $75,00023.80 – 31.90%
$150,001 and over$47,850 plus 45c for each $1 over $150,00031.90 – less than 45%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $30,00015c for each $1 over $6,0000 – 12.00%
$30,001 – $75,000$3,600 plus 30c for each $1 over $30,00012.00 – 22.80%
$75,001 – $150,000$17,100 plus 40c for each $1 over $75,00022.80 – 31.40%
$150,001 and over$47,100 plus 45c for each $1 over $150,00031.40 – less than 45%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $34,00015c for each $1 over $6,0000 – 12.35%
$34,001 – $80,000$4,200 plus 30c for each $1 over $34,00012.35 – 22.50%
$80,001 – $180,000$18,000 plus 40c for each $1 over $80,00022.50 – 32.22%
$180,001 and over$58,000 plus 45c for each $1 over $180,00032.22 – less than 45%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $35,00015c for each $1 over $6,0000 – 12.43%
$35,001 – $80,000$4,350 plus 30c for each $1 over $35,00012.43 – 22.31%
$80,001 – $180,000$17,850 plus 38c for each $1 over $80,00022.31 – 31.03%
$180,001 and over$55,850 plus 45c for each $1 over $180,00031.03 – less than 45%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $37,00015c for each $1 over $6,0000 – 12.57%
$37,001 – $80,000$4,650 plus 30c for each $1 over $37,00012.57 – 21.94%
$80,001 – $180,000$17,550 plus 37c for each $1 over $80,00021.94 – 30.30%
$180,001 and over$54,550 plus 45c for each $1 over $180,00030.30 – less than 45%

Taxable incomeTax on this incomeEffective tax rate
$1 – $6,000Nil0%
$6,001 – $37,00015c for each $1 over $6,0000 – 12.57%
$37,001 – $80,000$4,650 plus 30c for each $1 over $37,00012.57 – 21.94%
$80,001 – $180,000$17,550 plus 37c for each $1 over $80,00021.94 – 30.30%
$180,001 and over$54,550 plus 45c for each $1 over $180,00030.30 – less than 45%

In addition, the flood levy, introduced by the Gillard Labor government as a result of the 2010–11 Queensland floods, applied.
Taxable incomeTax on this incomeEffective tax rate
$1 – $18,200Nil0%
$18,201 – $37,00019c for each $1 over $18,2000 – 9.65%
$37,001 – $80,000$3,572 plus 32.5c for each $1 over $37,0009.65 – 21.93%
$80,001 – $180,000$17,547 plus 37c for each $1 over $80,00021.93 – 30.30%
$180,001 and over$54,547 plus 45c for each $1 over $180,00030.30 – less than 45%

Taxable incomeTax on this incomeEffective tax rate
$1 – $18,200Nil0%
$18,201 – $37,00019c for each $1 over $18,2000 – 9.65%
$37,001 – $80,000$3,572 plus 32.5c for each $1 over $37,0009.65 – 21.93%
$80,001 – $180,000$17,547 plus 37c for each $1 over $80,00021.93 – 30.30%
$180,001 and over$54,547 plus 45c for each $1 over $180,00030.30 – less than 45%

Taxable incomeTax on this incomeEffective tax rate
$1 – $18,200Nil0%
$18,201 – $37,00019c for each $1 over $18,2000 – 9.65%
$37,001 – $80,000$3,572 plus 32.5c for each $1 over $37,0009.65 – 21.93%
$80,001 – $180,000$17,547 plus 37c for each $1 over $80,00021.93 – 30.30%
$180,001 and over$54,547 plus 45c for each $1 over $180,00030.30 – less than 45%

In addition, the Temporary Budget Repair Levy, introduced by the Abbott Liberal government, was payable at a rate of 2% for taxable incomes over $180,000.
Taxable incomeTax on this incomeEffective tax rate
$1 – $18,200Nil0%
$18,201 – $37,00019c for each $1 over $18,2000 – 9.65%
$37,001 – $80,000$3,572 plus 32.5c for each $1 over $37,0009.65 – 21.93%
$80,001 – $180,000$17,547 plus 37c for each $1 over $80,00021.93 – 30.30%
$180,001 and over$54,547 plus 45c for each $1 over $180,00030.30 – less than 45%

In addition, the Temporary Budget Repair Levy was payable at a rate of 2% for taxable incomes over $180,000.
Taxable incomeTax on this incomeEffective tax rate
$1 – $18,200N/A0%
$18,201 – $37,00019c for each $1 over $18,2000 – 9.65%
$37,001 – $87,000$3,572 plus 32.5c for each $1 over $37,0009.65 – 22.78%
$87,001 – $180,000$19,822 plus 37c for each $1 over $87,00022.78 – 30.13%
$180,001 and over$54,232 plus 45c for each $1 over $180,00030.13 – less than 45%

In addition, the Temporary Budget Repair Levy was payable at a rate of 2% for taxable incomes over $180,000, and expired on 1 July 2017.
In October 2016, the federal government passed a bracket adjustment that raised the third marginal tax rate threshold from $80,000 to $87,000. These changes took effect from 1 July 2016.
Taxable incomeTax on this incomeEffective tax rate
$1 – $18,200Nil0%
$18,201 – $37,00019c for each $1 over $18,2000 – 9.65%
$37,001 – $87,000$3,572 plus 32.5c for each $1 over $37,0009.65 – 22.78%
$87,001 – $180,000$19,822 plus 37c for each $1 over $87,00022.78 – 30.13%
$180,001 and over$54,232 plus 45c for each $1 over $180,00030.13 – less than 45%

The temporary budget repair levy, which was introduced by the Liberal–National coalition Government under Prime Minister Abbott in financial year 2014/15 and payable at a rate of 2% for incomes over $180,000, ceased to apply on 1 July 2017.
Taxable incomeTax on this portion of incomeEffective overall tax rate
$1 – $18,200Nil0%
$18,201 – $37,00019c for each $1 over $18,2000 – 9.65%
$37,001 – $90,000$3,572 plus 32.5c for each $1 over $37,0009.65 – 23.11%
$90,001 – $180,000$20,797 plus 37c for each $1 over $90,00023.11 – 30.05%
$180,001 and over$54,097 plus 45c for each $1 over $180,00030.05 – less than 45%

Part of stage two of the tax cuts the Turnbull Liberal Government had begun to take effect - see Stage three tax cuts
Taxable incomeTax on this portion of incomeEffective overall tax rate
$1 – $18,200Nil0%
$18,201 – $37,00019c for each $1 over $18,2000 – 9.65%
$37,001 – $90,000$3,572 plus 32.5c for each $1 over $37,0009.65 – 23.11%
$90,001 – $180,000$20,797 plus 37c for each $1 over $90,00023.11 – 30.05%
$180,001 and over$54,097 plus 45c for each $1 over $180,00030.05 – less than 45%

Taxable incomeTax on this portion of incomeEffective overall tax rate
$1 – $18,200Nil0%
$18,201 – $45,00019c for each $1 over $18,2000 – 11.32%
$45,001 – $120,000$5,092 plus 32.5c for each $1 over $45,00011.32 – 24.56%
$120,001 – $180,000$29,467 plus 37c for each $1 over $120,00024.56 – 28.70%
$180,001 and over$51,667 plus 45c for each $1 over $180,00028.70 – less than 45%

Further changes to the threshold for the 32.5c and 37c bracket were made in 2019 by the Morrison Liberal Government, increasing the threshold for the marginal 32.5% rate to $45,001, and bringing the changes forward to 2020
Taxable incomeTax on this portion of incomeEffective overall tax rate
$1 – $18,200Nil0%
$18,201 – $45,00019c for each $1 over $18,2000 – 11.32%
$45,001 – $120,000$5,092 plus 32.5c for each $1 over $45,00011.32 – 24.56%
$120,001 – $180,000$29,467 plus 37c for each $1 over $120,00024.56 – 28.70%
$180,001 and over$51,667 plus 45c for each $1 over $180,00028.70 – less than 45%

Taxable incomeTax on this portion of incomeEffective overall tax rate
$1 – $18,200Nil0%
$18,201 – $45,00019c for each $1 over $18,2000 – 11.32%
$45,001 – $120,000$5,092 plus 32.5c for each $1 over $45,00011.32 – 24.56%
$120,001 – $180,000$29,467 plus 37c for each $1 over $120,00024.56 – 28.70%
$180,001 and over$51,667 plus 45c for each $1 over $180,00028.70 – less than 45%

Taxable incomeTax on this portion of incomeEffective overall tax rate
$1 – $18,200Nil0%
$18,201 – $45,00019c for each $1 over $18,2000 – 11.32%
$45,001 – $120,000$5,092 plus 32.5c for each $1 over $45,00011.32 – 24.56%
$120,001 – $180,000$29,467 plus 37c for each $1 over $120,00024.56 – 28.70%
$180,001 and over$51,667 plus 45c for each $1 over $180,00028.70 – less than 45%

Taxable incomeTax on this portion of incomeEffective overall tax rate
$1 – $18,200Nil0%
$18,201 – $45,00016c for each $1 over $18,2000 – 9.53%
$45,001 – $135,000$4,288 plus 30c for each $1 over $45,0009.53 – 23.18%
$135,001 – $190,000$31,288 plus 37c for each $1 over $135,00023.18 – 27.18%
$190,001 and over$51,638 plus 45c for each $1 over $190,00027.18 – less than 45%

The amended Stage three tax cuts, initially legislated by the Turnbull Liberal Government modified by the Morrison Liberal Government, and substantially changed by the Albanese Labor Government are set to take effect in this financial year