Income Tax Calculator | Your Australia mortgage

Understanding Income Tax and How This Calculator Can Help You

Every Australian contributes to nation building by paying taxes in various forms. For working Australians, part of their income goes to the Australian government and is used to make public services available and accessible, including health, education, defense, social security and maintenance of roads and railways.

Knowing how much tax you owe can help you determine how much of your income you can budget for your daily needs and to invest in wealth building assets like properties.

It is therefore crucial to understand how the income tax system works.

How does the Australian tax office define income?

To understand what income tax is and how to accurately use the income tax calculator, you must first understand how the Australian Tax Office defines income.

You receive income because of two things: working or investing. While it is common to think of income as means money, it is not necessarily the case – income can also take the form of goods and services. However, for tax purposes, income is generally viewed by its monetary value, regardless of its form.

The ATO classifies income into three categories: taxable, exempt and taxable. Income in the taxable income classification may be taxed once you earn enough to exceed the tax exemption threshold. Some forms of income that are considered taxable are your salaries, tips, tips and any other payment for your services, interest on bank accounts, dividends, investment income, bonuses, commissions, pensions, income from rental and allowances.

There are also types of income under the exempt classification – these cannot be taxed and may include government pensions and allowances, education payments, scholarships, scholarships, grants, and awards.

Taxable income is the part of your taxable income on which you pay tax. It is the difference between your taxable income and any deductions you can claim.

What deductions are allowed?

Australians can deduct certain expenses to reduce the amount of tax charged on their income. These deductions include all work-related expenses (clothing, vehicle, telephone and internet, self-education, home office expenses, insurance, union fees, and overtime meals). Any fees you pay for managing your tax affairs can also be claimed as a deduction.

You can also claim deductions for gifts or donations you make to registered charities. Note, however, that you would not be eligible for deductions if you receive a personal benefit in exchange for your donation.

If you have investments, you can reduce your taxable income by claiming all associated expenses, such as bank charges, interest, and management fees.

Finally, you can also claim deductions if you make personal contributions to your super fund.

How much is income tax and how is it calculated?

Income tax depends on your income bracket. Note that tax rates may differ each fiscal year, especially with the implementation of the government’s new tax plan.

It is also important to know that for tax purposes, a fiscal year runs from July 1 to June 30 of the following year. The tables below show the tax rates for the 2017-18 and 2018-19 fiscal years:

Resident tax rate FY2018-19

Taxable income Tax payable
Up to $ 18,200 None
$ 18,200 – $ 37,000 19c for every $ 1 over $ 18,200
$ 37,001 – $ 90,000 $ 3,572 plus 32.5c for every $ 1 over $ 37,000
$ 90,001 – $ 180,000 $ 20,797 plus 37.5c for every $ 1 over $ 90,000
Above $ 180,001 $ 54,097 plus 45c for every $ 1 over $ 180,000

Resident tax rate FY2017-18

Taxable income Tax payable
Up to $ 18,200 None
$ 18,200 – $ 37,000 19c for every $ 1 over $ 18,200
$ 37,001 – $ 90,000 $ 3,572 plus 32.5c for every $ 1 over $ 37,000
$ 90,001 – $ 180,000 $ 20,797 plus 37.5c for every $ 1 over $ 90,000
Above $ 180,001 $ 54,097 plus 45c for every $ 1 over $ 180,000

How does the income tax calculator work?

Your mortgage income tax calculator gives you an idea of ​​how much income tax you have been charged or will be charged in a certain fiscal year. It also calculates how much of your income you can actually earn after tax.

This tool takes into consideration your employment income as well as your other taxable income. With this, you can look back over the past three years to estimate how much income tax you would have paid in the 2016-2017 or 2017-2018 tax years – handy if you misplaced any of your received or if you want to check. previous earnings.

Unlike other tax calculators available online, your mortgage income tax calculator already takes into account the Medicare levy payable. This allows the tool to provide you with the estimated amount you could take home after tax and health care. It can even provide you with weekly, fortnightly, monthly and yearly income.

What to expect with the new tax system?

As part of the 2018-19 federal budget, the government will implement a seven-year personal income tax plan that will provide tax relief to low- and middle-income earners. The Income Tax Calculator can help you understand how these changes will affect you.

Beginning in fiscal year 2018-19, the government will cut taxes for low and middle income people up to $ 1,080 for single Australians and $ 2,160 for dual income families. Offsets will be available for income years 2018-19, 2019-20, 2020-21 and 2021-22.

As of fiscal year 2022-2023, the government will increase the upper threshold of the 19% tax bracket from $ 41,000 to $ 45,000. It will also increase tax compensation for low-income people from $ 645 to $ 700. By fiscal year 2024-25, the government will reduce the tax rate from 32.5% to 30%.

With these changes, around 13.3 million taxpayers could pay lower taxes permanently in the 2024-25 fiscal year.

The table below shows the comparison of FY2017-18 tax rates and forecast rates for FY 2024-25

Comparison between tax rates FY2017-18 and FY2024-25

Threshold Rate
FY2017-18 Up to $ 18,200 None
$ 18,200 – $ 37,000 19%
$ 37,001 – $ 87,000 32.5%
$ 87,001 – $ 180,000 37%
Above $ 180,000 45%
FISCAL 2024-25 Up to $ 18,200 None
$ 18,201 – $ 45,000 19%
$ 45,001 – $ 200,000 30%
Above $ 200,000 45%

Ask an expert today about your taxes

Taxes are complicated and there are times when you might need someone with professional experience to help you deal with these issues.

A professional may be able to help you identify the deductions you can take to reduce your taxes. They can also guide you through the process of paying your taxes, making it convenient and easy for you! Do not hesitate to contact one of our experts by clicking here.

Esther L. Steinbach