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Effective tax rates from Budget personal tax plan revealed
SYDNEY, 11 May 2018
Senior Tax Counsel Professor Robert Deutsch and Tax Counsel Stephanie Caredes at The Tax Institute have worked up some very revealing numbers showing the effective rate of tax at different levels of income now, post 1 July 2018 and post 1 July 2024 based on the Government’s personal tax rate plans. The Table below encapsulates their research.
SINGLE PERSON HOUSEHOLD – NO MEDICARE EXEMPTION APPLIES
Current Rates |
Post 1 July 2018 |
Post 1 July 2024 |
||||
Income Amount |
Total payable |
Effective average tax |
Total payable |
Effective average tax |
Total payable |
Effective average tax |
$10,000 |
Nil |
0 |
Nil |
0 |
Nil |
0 |
$20,000 |
Nil |
0 |
Nil |
0 |
Nil |
0 |
$30,000 |
$2,397 |
7.99% |
$2,197 |
7.32% |
$2,197 |
7.32% |
$40,000 |
$4,947 |
12.37% |
$4,657 |
11.64% |
$4,492 |
11.23% |
$50,000 |
$8,547 |
17.09% |
$8,017 |
16.03% |
$8,007 |
16.01% |
$60,000 |
$12,147 |
20.25% |
$11,617 |
19.36% |
$11,607 |
19.35% |
$70,000 |
$15,697 |
22.42% |
$15,167 |
21.67% |
$15,157 |
21.65% |
$80,000 |
$19,147 |
23.93% |
$18,617 |
23.27% |
$18,607 |
23.26% |
$90,000 |
$22,732 |
25.26% |
$22,067 |
24.52% |
$22,057 |
24.51% |
$100,000 |
$26,632 |
26.63% |
$26,117 |
26.12% |
$25,507 |
25.51% |
$110,000 |
$30,532 |
27.76% |
$30,167 |
27.42% |
$28,957 |
26.32% |
$120,000 |
$34,432 |
28.69% |
$34,217 |
28.51% |
$32,407 |
27.01% |
$130,000 |
$38,332 |
29.49% |
$38,197 |
29.38% |
$35,857 |
27.58% |
$140,000 |
$42,232 |
30.17% |
$42,097 |
30.07% |
$39,307 |
28.08% |
$160,000 |
$50,032 |
31.27% |
$49,897 |
31.19% |
$46,207 |
28.88% |
$180,000 |
$57,832 |
32.13% |
$57,697 |
32.05% |
$53,107 |
29.50% |
$200,000 |
$67,232 |
33.62% |
$67,097 |
33.55% |
$60,007 |
30.00% |
* “Tax payable” includes the Medicare levy and adjustments for the low income tax offset and low and middle income tax offset where relevant.
Professor Deutsch comments that “the Table shows that even though the Government’s policy will deliver the same marginal tax rate of 32.5% for a person on $50,000 and a person on $180,000 from 1 July 2024, the effective tax rates will be 16.01% and 29.50% respectively. After 1 July 2024, the actual tax paid will be $8,007 for the $50,000 earner and $53,107 for the $180,000 earner. Furthermore, the effective rate, which is what really matters, is highly progressive rising gradually from nil on an income of $20,000 to 30% on an income of $200,000.
“It clearly is not correct to say that the same tax is paid by someone on $50,000 and someone on $180,000. The most that can be said is that they have the same marginal tax rate which is a very different thing,” said Professor Deutsch.
ENDS
For more information, please contact: Professor Robert Deutsch on 0438 043 833 or Stephanie Conway, Media Relations Contact on: 02 8223 0011.
The Tax Institute is the leading forum for the tax community in Australia. Our reach includes membership of 12,000 tax professionals from commerce and industry, academia, government and public practice and 40,000 Australian business leaders, government employees and students. We are committed to representing our members, shaping the future of the tax profession and continuous improvement of the tax system for the benefit of all, through the advancement of knowledge, member support and advocacy.
Read more at taxinstitute.com.au