By Jimmy B. Prince

Part of Tax for Australians For Dummies Cheat Sheet

For resident individuals in Australia, tax is levied on worldwide income on a progressive basis, referred to as marginal tax rates. Your marginal tax rates (shown in the following table) can vary between 0 per cent and 45 per cent. The more income you earn, the greater the amount of tax you’re liable to pay.

Taxable Income Marginal Tax Rate
First $18,200 Nil
$18,200–$37,000 19%
$37,001–$80,000 32.5%
$80,001–$180,000 37%
Over $180,000 45%

The federal government has set a Temporary Budget Repair levy on high income earners to help reduce the federal budget deficit. For the 2015–16 tax year, you’re levied 2 per cent of your taxable income if you earn more than $180,000 per annum. This levy is to apply up to 30 June 2017 and effectively increases the top marginal tax rate from 45 per cent to 47 per cent.

A company is a separate legal entity and the company tax rate is 30 per cent (which reduces to 28.5 per cent if you run a small business and your company’s annual turnover — or sales — is less than $2 million).

The Medicare levy is used to help fund the Australian health system and disability care insurance scheme ‘DisabilityCare Australia’. The rate is 2 per cent of your taxable income. The Medicare levy surcharge applies if you don’t have private health insurance and your taxable income is above the following thresholds:

  • Single person $90,000

  • Couples/families $180,000

The Medicare levy surcharge increases (in stages) to 1.5 per cent if you’re an individual earning more than $140,000, or couples/families earning more than $280,000.

The family threshold for the Medicare levy surcharge increases by $1,500 for each dependent child after the first child.