Australian income tax rates for the 2013/2014 year, (and for 2012/2013 year)

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
$0-$18,200 0% Nil
$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
$0-$6,000 0% Nil
$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.


About Trish Power

Trish Power has written 25 articles on Learner Investor.

Trish Power is a long-time share and property investor. She is an author and journalist, who holds degrees in law and economics from the University of Melbourne and an advanced diploma in Professional Writing and Editing from RMIT University. She is the co-author of baby boomer investment bible, You Don’t Have to be Rich to be Wealthy (Wrightbooks), author of Superannuation For Dummies, 2nd Edition (Wiley), DIY Super For Dummies, 2nd edition (Wiley) and Super Freedom: Create a worry-free financial future in 6 steps (Wrightbooks). Trish is also the founder of independent superannuation site SuperGuide.com.au. Trish describes much of her financial writing as educative journalism. She is passionately committed to raising the level of financial literacy in Australia and empowering individuals to improve their financial circumstances.

© Copyright Trish Power 2014 (unless otherwise specified)

Copyright for this article belongs to Trish Power, and cannot be reproduced without express and specific consent.

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