Income tax thresholds are an important aspect to consider when calculating how much tax is liable for the financial year. Some additional factors on top of the income tax thresholds includes your residency, Medicare HECS payments.
Here is a quick table of what kind of tax rates you would be looking at based on an Australian
resident for tax purposes. This table is relevant for the 2019 financial year:
TAX ON THIS INCOME
|$18,201-$37,000||19||19c per dollar over $18,200|
|$37,001-$90,000||32.5||$3,572 plus 32.5c per dollar over $37,000|
|$90,001-$180,000||37||$20,797 plus 37c per dollar over $90,000|
|$180,001 and above||45||$54,097 plus 45c per dollar over $180,000|
*these rates do not include Medicare Levy
CALCULATING YOUR TAX RETURN
- We start by considering whether you are an Australian resident for tax purposes as this will determine the specific tax rate table that applies to you as a taxpayer.
- All income is pooled together during the financial year with consideration of the different accounting and tax treatments based on each income type.
- We reduce the total income by applying all deductible expenses in your return. This leaves us with your taxable income.
- The taxable income is then applied to the appropriate rate above.
- Based on the taxes you paid, we determine whether you have overpaid or underpaid in taxes for the financial year resulting in either a taxable refund or payable.
These may be applied to you which helps reduces the amount of tax that you are liable to pay during the financial year. Depending on how much you earn and where you sit on the tax table above, you may be eligible for offsets such as the low-income tax offset of $445 if you your taxable income is below $37,000
Medicare levy is a system created by the government in order to give Australian residents access to health care. This is partly funded with the use of Medicare levy that is an added tax of 2% based off your taxable income. Individuals pay this additional levy on top of the tax they pay when earning income. Those who earn under the income threshold are not obligated to pay the surcharge. During the 2019 financial year, this threshold sits at $21,980.
When attending a university as an Australian resident you are entitled to a Higher Education Contribution Scheme more commonly known as a HECS loan. This is a government loan allowing you to pay for your tuition fees at a later time when your income reaches over certain thresholds each financial year. For the 2019 financial year, if your income reaches over $51,957 you are liable to pay back 4% of your HELP Repayable Income (your total HECS loan). This will be accounted for in your tax return. If you have a HECS debt and are expecting to earn over this threshold amount for the financial year, please speak to your accountant to help your financial position in preparation of this debt owing.
Steven Wong Accountants
Accounting for Growth