Australia - Income tax system

The Australian income tax system is a federal system based on the Income Tax Act and other related Acts. The income tax year is 12 months ending 30 June (unless substituted accounting period granted).

Resident individuals

Resident individuals whose total taxable income for the year from all sources (regardless of whether it originates in or out of Australia) exceeds the tax-free threshold of $6,000 are required to file an Income Tax Return. Individuals as well as all other taxpayers must have a Tax File Number.

The net tax payable is computed by deducting from the gross tax: any rebates (e.g. for dependents, sole parent, housekeeper, pensioner, zone allowance, low income earner, net medical expenses in excess of $1,500 and franking credits etc.) and any other credits (e.g. for foreign taxes).

For resident individuals with taxable incomes over $17,309 (for the 2008 year), an amount for the Medicare Levy must be added equal to 1.5% of the taxpayers taxable income (unless one of the various exemptions or reductions applies). The levy is collected in conjunction with, and in the same way as, income tax.

To arrive at the actual tax payable, the net tax payable will generally need to be adjusted by deducting prepaid tax (whether by tax installment deductions withheld from salary by an employer or by Pay As You Go installments paid).

Individual tax rates

Residents

Resident individual tax rates from 1 July 2008

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

Resident individual tax rates from 1 July 2009

Taxable income	Tax on this income
$1 – $6,000	Nil
$6,001 – $35,000	15c for each $1 over $6,000
$35,001 – $80,000	$4,350 plus 30c for each $1 over $35,000
$80,001 – $180,000	$17,850 plus 38c for each $1 over $80,000
$180,001 and over	$55,850 plus 45c for each $1 over $180,000

Non Residents

Non-resident individual tax rates from 1 July 2008

Taxable income	Tax on this income
$0 – $34,000	29c for each $1
$34,001 – $80,000	$9,860 plus 30c for each $1 over $34,000
$80,001 – $180,000	$23,660 plus 40c for each $1 over $80,000
$180,001 and over	$63,660 plus 45c for each $1 over $180,000

Non-resident individual tax rates from 1 July 2009

Taxable income	Tax on this income
$0 – $35,000	29c for each $1
$35,001 – $80,000	$10,150 plus 30c for each $1 over $35,000
$80,001 – $180,000	$23,650 plus 38c for each $1 over $80,000
$180,001 and over	$61,650 plus 45c for each $1 over $180,000