The amount of income tax that you can save, when making an investment, should never be the sole factor when making any investment decision or deciding on a particular investment strategy, but in Australia, tax touches everything.
Before investing in, or selling any major investment, a discussion with your accountant about the timing, or costs, of that transaction could potentially save you thousands of dollars in tax.
For your convenience we have included the latest income tax rates, and the income rates for the previous financial year. The tax rates applicable for the2013/2014 year, and future years are set out in the tables below. We have also included the tax rates for the 2012/2013 and 2011/2012 years.
Note: In May 2013, the previous federal government announced that the second round of tax cuts, taking effect from the 2015/2016, would not be going ahead, which means the income tax rates that apply for the 2012/2013, the 2013/2014 and the 2014/2015 years, will continue to apply for future years (see table below).
Note: If you’re Age Pension age or older, you may be eligible for a higher tax-free threshold by taking advantage of the Senior Australians & Pensioners Tax Offset (SAPTO). Refer to the information website, SuperGuide for more information on SAPTO.
Note: The primary source for taxpayers on any information relating to tax rates is the Australian Taxation Office website (www.ato.gov.au). LearnerInvestor doesn’t answer questions specifically on the income tax rates.
Income tax rates for 2012/2013 and 2013/2014 financial years
Effective since the start of the 2012/2013 year, the tax-free threshold jumped to the first $18,200 of your income. Potentially, you can earn up to $20,542 (effective since the 2012/2013 year) before any income tax is payable, when taking into account the Low Income Tax Offset (LITO). From the 2012/2013 year onwards, your top tax rate is 0%, 19%, 32.5%, 37% or 45% (plus Medicare levy).
|Income tax rates for 2012/2013 and 2013/2014 financial years (and future years)|
|Income||Marginal tax rate||Tax payable|
|$18,201- $37,000||19%||19 cents for each $1 over $18,200|
|$37,001-$80,000||32.5%||$3,572 plus 32.5 cents for each dollar over $37,000|
|$80,001-$180,000||37%||$17,547 plus 37 cents for each dollar over $80,000|
|$180,001 and above||45%||$54,547 plus 45 cents for each dollar over $180,000|
Source: Adapted from information on the ATO website (www.ato.gov.au). Note that Medicare Levy of 1.5% is also payable by most taxpayers. From 1 July 2014, the Medicare Levy will increase by 0.5% to 2%, to help fund the National Disability Insurance Scheme.
Income tax rates for 2011/2012 financial year
For the 2011/2012 year, a tax-free threshold on the first $6000 of your income applied, and you could earn up to $16,000 (for the 2011/2012 year) without paying income tax when taking into account the Low Income Tax Offset (LITO). For the 2011/2012 year, your top marginal tax rate could be 0%, 15%, 30%, 37% or 45% (plus Medicare levy).
|Income tax rates for 2011/2012 financial year|
|Income||Marginal tax rate||Tax payable|
|$6,001- $37,000||15%||15 cents for each $1 over $6,000|
|$37,001-$80,000||30%||$4,650 plus 30 cents for each dollar over $37,000|
|$80,001-$180,000||37%||$17,550 plus 37 cents for each dollar over $80,000|
|$180,001 and above||45%||$54,550 plus 45 cents for each dollar over $180,000|
Source: Adapted from information on the ATO website (www.ato.gov.au). Maximum LITO payable is $1500 up to taxable income of $16,000 (for 2012/2012 year). Note: For the 2011/2012 year only, if your taxable income was more than $50,000 then your income is also subject to a flood levy. The flood levy is set out in the table below.
|Taxable income||Flood levy (for 2011/2012 year) on this income|
|$0 to $50,000||Nil|
|$50,001 to $100,000||Half a cent for each $1 over $50,000|
|Over $100,000||$250 plus 1c for each $1 over $100,000|
Table source: ATO (www.ato.gov.au)
Note: For the 2011/2012 year, the Medicare Levy low-income threshold was $19,404 (lower threshold) and $22,828 (upper threshold) for singles. For families, the additional amount of threshold for each dependent child or student is $3,007 (lower threshold) and $3,538 (upper threshold). For the 2011/2012 year, the Medicare Levy low-income threshold for pensioners below Age Pension age is $30,451 with an upper threshold of $35,824. For those on SATO (now known as SAPTO) it is $30,685 with an upper threshold of $36,100.