Calculating Tax
How do you calculate Australian tax rates to determine what to pay tax-wise? You can calculate tax by determining what rate applies to you from the tax tables above, for example:
If you are an Australian resident and earn $50,000. The rate which applies is $5,092 plus 32.5 cents for each dollar over $45,000. This translates to you paying $5,092 for your earnings up to $45,000. The remaining $5,000, is subject to the higher rate of 32.5%, which amounts to $1625. Therefore, the total tax payment for a $50,000 earner is $6,717.
Many people falsely believe that your whole income is subject to a higher tax rate once you reach a new tax bracket. However, you only pay the higher tax rate on the income that exceeds the lower rate's threshold.
The tax-free threshold means you are not liable to pay taxes on the first $18,200 you earn. The tax-free threshold is set to remain at this level until the 2024-2025 financial year. At the end of every financial year, you need to file a tax return and in your return, you need to declare your assessable income.
What is assessable income?
Assessable income includes your salary, your bonuses, leave pay, and commissions. Assessable income also includes annuities, super funds, government payments, investment income, income from a business, trust or partnership, foreign income, and crowdfunding income.