Latest Update on Current Rates and Thresholds
Australia is famous for its taxation system all around the globe. Australian citizens have to keep a good eye on the current tax rates and thresholds in order to be accurate while their Tax Return Sydney CBD. Income tax is considered as the biggest proportion of revenue for Australian Taxation System. Three major sources add together for income tax collection; individuals, businesses and capital gains. These sources contribute more than one can imagine. 67% of total revenue for federal government and more than 55% total revenue for 3 tiers of Australian government.
The current taxation system being implemented in Australia is “progressive”. Profit oriented companies have to pay a flat rate 30% tax in Australia. On the other hand, capital gains tax is only applied when the gain is actually realized. On the behalf of Government of Australia, the Australian Taxation Office collects income tax from individuals. Income tax is only calculated by keeping taxable income as a base for a taxable entity. Financial year in Australia starts from July 1 to June 30.
Finding Details of Current Income Tax Rates
Income tax is a big worry for citizens of Australia as currently the “progressive” taxation system is being applied. It means the more you earn, the more tax you pay. The tax conditions have been renewed by ATO for financial year 2014 – 2015. Tax free threshold remains same as the previous year, which is $18,200. However, there is a significant increase of 2% in the highest marginal rate for individuals. The current highest marginal rate is 47%. From your taxable income, another 2% has to be paid in form of Medicare levy. For assistant or specific advise contact your tax return Sydney agent.
Like many other countries, the income tax has to be withheld by payees/employers from their salaried employees/workers. The process usually ends up in ATO refunding over charged tax to the individuals. Every employee needs to provide 9 digit TFN to his/her employer in order to keep the process of withholding continue. Different tax brackets are used to calculate withholding amount. You are entitled to make a decision on providing the TFN to your employer as it’s not a compulsion. In case an employee does not provide TFN, the employer has to withhold tax at highest marginal rate starting from the first dollar earned.
Looking at Current Income Tax Rates 2014 – 2015
- $0 – $18,200: Marginal Tax Rate 0%, Tax Payable $0
- $18,201 – $37,000: Marginal Tax Rate 19%, Tax Payable 19c for every dollar over minimum amount
- $37,001 – $80,000: Marginal Tax Rate 32.5%, Tax Payable 32.5c for every dollar over minimum amount
- $80,001 – $180,000: Marginal Tax Rate 37%, Tax Payable 37c for every dollar over minimum amount
- $180,001 – Above: Marginal Tax Rate 47%, Tax Payable 47c for every dollar over minimum amount
As you can see above, the highest marginal rate for year 2014 – 2015 has been temporarily increased by the government. The marginal tax rates which can be applied to your income are 0%, 19%, 32.5%, 37% and 47% plus Medicare levy. Calculate the total yearly income, you will be able to identify what amount of tax has to be paid by you.
The Truth About Thresholds
Threshold is the term which people care about most when it comes to the discussion of latest income tax rate. A threshold is the shield which protects you from paying any tax on your income. Government of Australia has kept $18,200 yearly income as threshold for individuals. For the citizens of Australia, major good news came on July 1, 2012 when government announced to increase the tax free income threshold from $6,000 to $18,000. What does it actually mean? To make it simpler for you, if you earn any amount under $18,200 in one year then you are not liable to pay tax to the government of Australia. The tax will apply only if your yearly income is above $18,200.
Have you already provided TFN to your employer? If the answer is “yes” then you don’t need to do anything to gain new threshold of $18,200. Your employer must have taken care of it. Apply for TFN if you haven’t got it yet. On the other hand, always provide TFN to your employer in case of changing a job.
What About Individuals Doing Two Jobs?
There could be more than one employer/payer for an individual. Should the person apply for two thresholds? No, the individual should only apply tax free threshold for the income which is higher. It is also known as primary income source.
Additional income source could be second job, taxable pension, etc. It is mandatory for second payer to withhold tax from your payments. In case the payer does not withhold any tax amount then you will be in tax debt at end of financial year. On the other hand, if an individual is absolutely sure that the total income would be less than $18,200 for a year then he/she can apply for tax free threshold from both payers.
Government of Australia has taken care of individuals who are earning the lowest amount of income on yearly basis by increasing threshold bracket significantly in 2012. It has benefited millions of Australians in numerous ways.