Tax Rates 2019

Individual income tax rates

These income tax rates show the amount of tax payable in every dollar for each income tax bracket depending on your circumstances.

Find out about the tax rates for individual taxpayers who are:

  • Residents
  • Foreign residents
  • Children
  • Working holiday makers

 

Residents

These rates apply to individuals who are Australian residents for tax purposes.

 

Resident tax rates 2019–20

Resident tax rates 2019–20
Taxable incomeTax on this income
0 – $18,200Nil
$18,201 – $37,00019c for each $1 over $18,200
$37,001 – $90,000$3,572 plus 32.5c for each $1 over $37,000
$90,001 – $180,000$20,797 plus 37c for each $1 over $90,000
$180,001 and over$54,097 plus 45c for each $1 over $180,000

The above rates do not include the Medicare levy of 2%.

 

Resident tax rates 2018–19

Resident tax rates 2018–19
Taxable incomeTax on this income
0 – $18,200Nil
$18,201 – $37,00019c for each $1 over $18,200
$37,001 – $90,000$3,572 plus 32.5c for each $1 over $37,000
$90,001 – $180,000$20,797 plus 37c for each $1 over $90,000
$180,001 and over$54,097 plus 45c for each $1 over $180,000

The above rates do not include the Medicare levy of 2%.

The above rates include changes announced in the 2018-19 Federal Budget.

See also:

  • Medicare levy
  • Temporary budget repair levy

 

Foreign residents

These rates apply to individuals who are foreign residents for tax purposes.

 

Foreign resident tax rates 2019–20

Foreign resident tax rates 2019–20
Taxable incomeTax on this income
0 – $90,00032.5c for each $1
$90,001 – $180,000$29,250 plus 37c for each $1 over $90,000
$180,001 and over$62,550 plus 45c for each $1 over $180,000

Foreign resident tax rates 2018–19

Foreign resident tax rates 2018–19
Taxable incomeTax on this income
0 – $90,00032.5c for each $1
$90,001 – $180,000$29,250 plus 37c for each $1 over $90,000
$180,001 and over$62,550 plus 45c for each $1 over $180,000

The above rates include changes implementing changes announced in the 2018-19 Federal Budget.

See also:

  • Temporary budget repair levy

Note: In the 2019 Federal Budget the coalition government proposed income tax cuts, building on the Personal Income Tax Plan announced in the 2018 Federal Budget. These have now passed Parliament and will soon be legislated. 

The Australian Tax Office (ATO) collects income tax from working Australians each financial year. Financial years run from 1 July to 30 June of the following year, so we are currently in the 2019/2020 financial year (1 July 2019 to 30 June 2020).

The income tax brackets and rates for Australian residents for the current year are listed below.

Children

If you are under the age of 18, and receive unearned income (for example, investment income), special rates apply.

See also:

  • Your income if you are under 18 years old

Working holiday makers

These rates apply to working holiday maker income regardless of residency for tax purposes.

You are a working holiday maker if you have a visa subclass:

  • 417 (Working Holiday)
  • 462 (Work and Holiday).

Background: In the 2018 and 2019 Federal Budgets, the Federal government announced packages of income tax cuts, including the introduction of the new (and temporary) Low and Middle Income Tax Offset (LMITO) and changes to most tax brackets. For more detail see SuperGuide articles Australian personal income tax cuts from 2018/2019 year and 2019 Federal Budget overview: Super, tax and related announcements.

Working holiday maker tax rates 2019–20

Working holiday maker tax rates 2019–20
Taxable incomeTax on this income
$0 – $37,00015c for each $1
$37,001 – $90,000$5,550 plus 32.5c for each $1 over $37,000
$90,001 – $180,000$22,775 plus 37c for each $1 over $90,000
$180,001 and over$56,075 plus 45c for each $1 over $180,000

Working holiday maker tax rates 2018–19

Working holiday maker tax rates 2018–19
Taxable incomeTax on this income
$0 – $37,00015c for each $1
$37,001 – $90,000$5,550 plus 32.5c for each $1 over $37,000
$90,001 – $180,000$22,775 plus 37c for each $1 over $90,000
$180,001 and over$56,075 plus 45c for each $1 over $180,000

The above rates include changes announced in the 2018-19 Federal Budget.

 

Calculators

A simple tax calculator is available to help you calculate the tax on your taxable income.

The Income tax estimator gives you an estimate of the amount of your tax refund or debt, and takes into account:

  • the Medicare levy
  • higher education loan scheme repayments
  • tax offsets
  • tax credits.

Tax deducted from your pay

If you want to know how much your employer (or other payer) is required to withhold from payments to you, use our Tax withheld calculator.

Our other useful calculators include:

  • Simple tax calculator
  • Income tax estimator.

See also:

  • Tax tables
  • Your income if you are under 18 years old
  • Individual income tax rates for prior years
  • Video tax tips on atoTVExternal Link

If you need help applying this information to your personal situation, phone us on 13 28 61.

Male pensioner sitting at table with paperwork

Residents

These rates apply to individuals who are Australian residents for tax purposes.

Resident tax rates 2018–19

Resident tax rates 2018–19
Taxable incomeTax on this income
0 – $18,200Nil
$18,201 – $37,00019c for each $1 over $18,200
$37,001 – $90,000$3,572 plus 32.5c for each $1 over $37,000
$90,001 – $180,000$20,797 plus 37c for each $1 over $90,000
$180,001 and over$54,097 plus 45c for each $1 over $180,000

The above rates do not include the Medicare levy of 2%.

The above rates include changes announced in the 2018-19 Federal Budget

Taxes cut!

The July 2019 tax cuts mean that most taxpayers will receive a bigger tax offset when they put in their return. The tax brackets below are correct for 2019-20.

Tax brackets 2019-2020

Taxable incomeTax on this income
0 - $18,200Nil
$18,201 - $37,00019c for each $1 over $18,200
$37,001 - $90,000$3,572 plus 32.5c for each $1 over $37,000
$90,001 - $180,000$20,797 plus 37c for each $1 over $90,000
$180,001 and over$54,097 plus 45c for each $1 over $180,000

Tax brackets 2018-2019

Taxable incomeTax on this income
0 - $18,200Nil
$18,201 - $37,00019c for each $1 over $18,200
$37,001 - $90,000$3,572 plus 32.5c for each $1 over $37,000
$90,001 - $180,000$20,797 plus 37c for each $1 over $90,000
$180,001 and over$54,097 plus 45c for each $1 over $180,000

These tables do not include the 2% Medicare levy.

You can actually earn up to $20,542 before paying any income tax once the low income tax offset is taken into account.

Tax brackets 2017-2018

Taxable incomeTax on this income
0 - $18,200Nil
$18,201 - $37,00019c for each $1 over $18,200
$37,001 - $87,000$3,572 plus 32.5c for each $1 over $37,000
$87,001 - $180,000$19,822 plus 37c for each $1 over $90,000
$180,001 and over$54,232 plus 45c for each $1 over $180,000
Businessman Doing Calculations

What is included in assessable income?

Your assessable income must be declared on your tax return each year. It includes any of the following:

1. Employment income

This includes any income you receive for full-time, part-time or casual work. Examples of employment income are:

  • Salary, wages, commissions, bonuses, parental leave pay and payments from a work-related insurance scheme (such as income protection, sickness/ accident payments or worker’s compensation).
  • Any allowances that you may receive from your employer, such as car, travel, clothing, laundry, meal, working conditions or special duties/qualifications allowances.
  • Any other income you might receive (like tips, awards or discounted employee shares).
  • Any lump sum payments you might receive, such as when you leave a job and are paid out for any unused leave.
  • Any reportable fringe benefits that you might have received in excess of $2,000 over a 12-month period, such as using a company car for private purposes or having your employer cover some of your private expenses as part of a salary packaging arrangement. It’s important to understand though that you although you need to declare fringe benefits, you don’t actually pay tax on it. It’s used to work out your eligibility for any government benefits.

2. Super pensions and annuities

If you’re receiving a super pension, it may have three different components:

  • A taxed element (where your fund has already paid tax),
  • An untaxed element (where tax still needs to be paid), and
  • A tax-free element (where no tax is payable).

Depending on your age, you may need to declare both the taxed and untaxed elements as income in the financial year you receive the payments, so that your overall tax obligation (or refund) can be determined by the ATO.

If you’re receiving an annuity (i.e. a series of regular payments from a life insurance company), it will also usually have taxable and tax-free components. You’ll need to declare the taxable components.

3. Government payments

If you’re receiving government payments like the aged pension or carer payments, they must be declared on your tax return. But it’s important to understand that some government payments are tax-exempt. You must still declare them though because they can affect your eligibility for other government benefits and tax offsets.

4. Investment income

This can include:

  • Any interest you receive from accounts you have with banks or other financial institutions
  • Any share dividends or returns from managed funds that you may receive
  • Any rent that you receive on an investment property
  • Any capital gains you make on the sale of an asset

5. Business, partnership and trust income

Any income you receive from running a business must be declared. If you’re a sole trader, you don’t need to lodge a separate business tax return.

If you’re in business in partnership with others, you must declare your share of the partnership’s income or loss as assessable income on your tax return.

If you’re a trustee in a trust, you must declare your share of the trust’s income in your tax return, even if it remained in the trust and you didn’t actually receive it.

6. Foreign income

If you’re an Australian resident for tax purposes, you must declare any foreign income that you receive, even if it’s already been taxed overseas. The ATO uses a system of credits and exemptions to work out if Australian tax is still payable on any foreign income you’ve earned.

7. Crowdfunding income

If you’ve raised any income for a project or venture via crowdfunding, some of it may be taxable if you’re carrying on a business or other profit-making scheme

Some of the above forms of assessable income will be automatically provided to the ATO each year by your employer/s and financial institutions where you’ve invested funds.

There are also other payments you might receive that aren’t included in your assessable income. Common examples include:

  • Lump sum payments that you receive from insurance policies (e.g. for total and permanent disablement)
  • The tax-free component of any eligible termination payments you receive when you leave an employer
  • Genuine redundancy payments (up to certain limits based on your length of service)
  • Child support or maintenance payments

What deductions are you allowed?

Eligible deductions reduce your e income and therefore the amount of tax you’re required to pay. The most common deductions are:

1. Work-related expenses

These include:

  • Vehicle and travel. You can claim vehicle and travel expenses if you personally incur them as part of doing your work duties and you aren’t reimbursed by your employer (for example, if you do deliveries using your own vehicle). You can also claim for any private costs of travelling between your employer’s different locations. But it’s important to understand that you can’t claim the cost of travelling to and from work to your home.
  • Clothing, laundry and dry-cleaning. You can claim for your cost of buying and cleaning work clothing provided that the clothing falls into at least one of the following categories:
    • It’s occupation-specific
    • It’s protective
    • It’s a compulsory uniform
  • Home office. If you regularly work from home, you can claim the cost for work-related home office expenses, including a portion of your home’s running expenses (like phone, electricity and internet costs) based on your dedicated work area, as well as any work-related equipment that you buy.
  • Phone and internet. If you’re paying for your own phone and internet connections and you use them for work purposes, you can claim the percentage that relates to work use.
  • Overtime meals. If you get an overtime meal allowance as part of your employment conditions (and which you must include in your assessable income), you can claim up to that amount as an expense if you’ve used it.
  • Self-education. You can claim the cost of self-education expenses (e.g. any costs associated with a course that leads to a formal qualification) provided they relate directly to your current employment. But you can’t claim repayments for any government assistance you receive to take a course (e.g. the Higher Education Loan Program).
  • Tools and equipment. If you need to buy tools and other equipment to earn an income, you can claim a deduction for all or some of the cost, depending on the percentage of work-related and personal use.
  • Other work-related expenses. This includes items like income protection insurance, union fees, and any personal costs associated with attending work-related seminars or workshops.

2. The cost of managing your tax affairs

You can claim the cost of managing your tax affairs, including the cost of advice for preparing and lodging your tax return and business activity statements (BAS).

3. Gifts and donations

You can claim the cost of any gifts or donations that you make to “deductible gift recipients” (such as registered charities). You can’t claim a donation if you received a personal benefit in exchange for your gift or donation, even if it’s a ticket to win a prize.

4. Interest, dividend and other investment income deductions

Any expenses associated with earning assessable interest, dividend or other investment income (like bank fees, interest on money borrowed to buy shares that have provided you with dividends, or investment management fees).

5. Personal super contributions

If you make a personal contribution to your super fund, you can claim a tax deduction provided that you complete an ATO form and send it to your super fund. Your super fund will tax the concessional super rate of 15%.

When claiming any tax deduction, it’s important to keep records so that you can substantiate your claim if you’re ever audited by the ATO.

What is taxable income?

Your taxable income can be decreased by reducing your assessable income or increasing your deductions. For example, a negative gearing investment strategy relies on offsetting a loss from a negatively geared investment against other income thereby reducing taxable income and therefore tax payable. In other words the investor is increasing their deductions to reduce their taxable income.

Similarly, salary sacrificing an amount into superannuation reduces an individual’s assessable income. This is because the individual is making a pre-tax contribution from their income to their super account. The contribution is deducted at the time the individual is paid and therefore reduces the gross (assessable) income of the individual. This in turn indirectly reduces the taxable income of the individual. Moreover, the super contribution is generally taxed at a concessional rate of 15% in the super fund (subject to the $25,000 contributions cap being complied with).

Income tax offsets, levies and surcharges

Low Income Tax Offset (LITO)

The Low Income Tax Offset (LITO) was originally introduced by the Government in 1993, providing low income earners who are Australian residents with a tax offset. LITO effectively means that you can earn up to $20,542 before any income tax is payable.

The table below outlines the method for calculating LITO:

IncomeLITO amount
$37,000 or less$445
$37,001 – $66,667$445 less ((Taxable Income minus $37,000) x 1.5%))
More than $66,667Nil

Source: ATO

Learn more about how the Low Income Tax Offset (LITO) works.

Low and Middle Income Tax Offset (LAMITO or LMITO)

The Low and Middle Income Tax Offset is available to Australian resident individuals that have taxable income not exceeding $125,333 for an income year during the 2018/2019 to 2021/2022 income years.The Low and Middle Income Tax Offset will operate in addition to the LITO and taxpayers may be entitled to receive both offsets during the 2018/2019 to 2021/2022 income years.

The amount of the offset will depend on the taxpayer’s relevant income level, as set out in the following table:

Relevant income for the
2018/2019 to 2021/2022 income years
Low and Middle Income Tax Offset amount
$37,000 or less$255
$37,001 – $48,000$255, plus 7.5% of the amount of relevant income exceeding $37,000 (to a maximum benefit of $1,080)
$48,001 – $90,000$1,080 (maximum)
$90,001 – $126,000$1,080, less 3% of the amount of relevant income exceeding $90,000

Source: ATO

Note that the new Low Income Tax Offset will replace both the Low and Middle Income Tax Offset and the LITO in the 2022/2023 and later income years. The new offset will be available to Australian resident individuals if their taxable income for the relevant income year does not exceed $66,667.

Learn more about how the Low and Middle Income Tax Offset (LAMITO) works.

Seniors and Pensioners Tax Offset (SAPTO)

SAPTO is a tax offset that’s available to eligible seniors and pensioners in Australia. In some cases, it can totally eliminate a recipient’s tax liability and their need to lodge a tax return. There are two eligibility requirements for the SAPTO:

1. You must have reached the pension age and be eligible to receive it.

The Age Pension age in Australia currently depends on your date of birth. The minimum age is currently 66 years, and this will progressively rise to 67 for all Australians from 1 July 2023.

2. You must pass a rebate income threshold test to determine whether you’re entitled to a full or partial offset.

Your rebate income is the total of following items:

  • your taxable income (if any)
  • your reportable employer super contributions (if any)
  • your deductible personal super contributions (if any)
  • your net financial investment loss (if any)
  • your net rental property loss (if any)
  • your fringe benefits (if any)

If you’re single, your total rebate income must be less than $32,279 to be eligible for the maximum SAPTO of $2,230. The SAPTO progressively reduces by 12.5 cents for every dollar over this amount, up to an income level of $50,119, where the offset cuts off completely. If you have a spouse, your combined rebate income must be less than $57,948 for you to both receive the combined spousal SAPTO of $3,204. The spousal SAPTO progressively reduces for individual income levels higher than this amount, up to $83,580, where the offset cuts off completely.

Learn more about how the Seniors and Pensioners Tax Offset (SAPTO) works.

Medicare levy

Medicare gives Australian residents access to universal health care. It is partly funded by the Medicare levy, which is 2% of an individual’s taxable income. Individuals pay Medicare levy in addition to the tax they pay on their taxable income.The Medicare levy applies only to residents. The Medicare levy low-income thresholds (at or below which no Medicare levy is payable) and Medicare levy phase-in limits are shown in the table below. If the individual’s income is above the Medicare levy phase-in limits, the full Medicare levy rate is imposed as follows:

  • Prior to the 2014/2015 income year — 1.5%
  • 2014/2015 and later income years — 2%.

Where the income is above the low-income threshold but no more than the phase-in limit, the levy payable is shaded in such that the levy is 10% of the excess of taxable income over the low-income threshold. This is shown below in:

  • Columns A to D as: (Low-income threshold | Phase-in limit)
  • Column E as: (Increase in lower income limit | Increase in upper income limit).
 ABCDE
Income yearIndividualsFamiliesPensioners below age pension ageSeniors+ amount for each dependent child/student
2017/2018$21,980 | $27,475$37,089 | $46,361$34,758 | $43,447$3,406 | $4,257
2016/2017$21,655 | $27,068$36,541 | $45,667$34,244 | $42,805$3,356 | $4,195
2015/2016$21,335 | $26,668$36,001 | $45,001$33,738 | $42,172$3,306| $4,132,
2014/2015$20,896 | $26,120$35,261 | $44,076$33,044 | $41,305$3,238| $4,047,
2013/2014$20,542 | $24,167$34,367 | $40,432$32,279 | $37,975$3,156| $3,713
2012/2013$20,542 | $24,167$33,693 | $39,639$32,279 | $37,975$3,094 | $3,640
2011/2012$19,404 | $22,829$32,743 | $38,522$30,451 | $35,825$30,685 | 36,100$3,007 | $3,538

Source: ATO. Note 2018/2019 figures are not yet available.

Medicare levy surcharge

An additional Medicare levy surcharge (MLS) is payable by taxpayers without adequate private health insurance. The MLS is calculated, depending on the individual’s surcharge income, at 1%, 1.25% or 1.5% of:

  • Taxable income,
  • Total reportable fringe benefits, and
  • Any amount on which family trust distribution tax has been paid.

Surcharge income includes:

  • Taxable income,
  • Reportable fringe benefits,
  • Total net investment losses (e.g. negative gearing deductions), and
  • Reportable super contributions.

Medicare levy surcharge income thresholds

The Medicare levy surcharge (MLS) thresholds are as follows:

Income yearIncome threshold
for individuals
Income threshold
for families
Rate of surcharge
From 2014/2015 onwards$90,000$180,000See table below
2013/2014$88,000$176,000See table below
2012/2013$84,000$168,000See table below
2011/2012$80,000$160,0001%

The MLS thresholds for the 2014/2015 to the 2020/2021 income years are as follows:

Tiers for 2014/2015 to 2020/2021Income threshold
for individuals
Income threshold
for families
Rate of surcharge
Tier ‘0’Up to $90,000Up to $180,0000%
Tier 1$90,001 – $105,000$180,001 – $210,0001%
Tier 2$105,001 – $140,000$210,001 – $280,0001.25%
Tier 3$140,001 and above$280,001 and above1.50%

Lifetime Health Cover loading

A person who does not have private health (hospital cover) insurance on their Lifetime Health Cover base day (usually 1 July following the 31st birthday) but who later in life decides to take out private hospital cover will pay a 2% Lifetime Health Cover (LHC) loading on top of their premium for every year they are aged over 30.

The LHC loading also applies if a person ceases to have private health insurance and then later decides to take out private health insurance again. There is an exception, known as ‘Days of Absence’ which permits someone to be without hospital cover for periods totalling 1,094 days (i.e. three years less one day) during their lifetime, without affecting their loading. This covers small gaps, such as switching from one fund to another.

However, if the total gap period exceeds 1,094 days, the person will pay a 2% loading on re-joining private hospital cover. The loading increases by 2% for every year without cover after that. The LHC is removed after 10 continuous years of private health insurance cover. The private health insurance offset has not applied to the Lifetime Health Cover loading since 1 July 2013.

Private Health Insurance Offset

The private health insurance offset is an amount the government contributes towards the cost of an individual’s private health insurance premiums. The offset can be claimed for premiums paid for a private health insurance policy that provides private patient hospital cover or combined hospital and general cover. The offset is income tested, which means eligibility to receive it depends on an individual’s income. Persons with a higher income may have their offset entitlement reduced or may not be entitled to any offset at all.

The rates and thresholds for the private health insurance offset which apply for the 2016/2017 to 2018/2019 income years are as follows:

Offset entitlement by income threshold
Tier ‘0’Tier 1Tier 2Tier 3
SinglesUp to $90,000$90,001–$105,000$105,001–$140,000$140,001 or more
Couples/familiesUp to $180,000$180,001–$210,000$210,001–$280,000$280,001 or more
Rate of Medicare levy surcharge
All ages0%1.0%1.25%1.5%
Rate of Private Health Insurance Offset: 1 April 2018  – 31 March 2019
Under 65 years25.415%16.943%8.471%0%
65–69 years29.651%21.180%12.707%0%
70 years and over33.887%25.415%16.943%0%
Rate of Private Health Insurance Offset: 1 April 2017 – 31 March 2018
Under 65 years25.934%17.289%8.644%0%
65–69 years30.256%21.612%12.966%0%
70 years and over34.579%25.934%17.289%0%
Rate of Private Health Insurance Offset: 1 July 2016 – 31 March 2017
Under 65 years26.791%17.861%8.930%0%
65–69 years31.256%22.326%13.395%0%
70 years and over35.722%26.791%17.861%0%

The Medicare levy surcharge and private health insurance offset income thresholds were paused at the 2014/2015 amounts from 1 July 2015 and will remain unchanged for six years from 2014/2015 to 2020/2021. The private health insurance income thresholds for offset purposes are normally adjusted annually on 1 April. The annual adjustment has been paused for three years from 2015/2016.

Disclaimer: The contents of this article are for the purposes of providing general information only. Persons should seek appropriate advice from a tax adviser, accountant or financial adviser before undertaking any investments or strategies with respect to their tax or superannuation interests.

Company income tax rate

  • Base rate* entities - 27.5%
  • All other companies - 30%

* A base rate entity for the 2019-20 income year is one with ‘base rate entity passive income’ that is no more than 80 per cent of its assessable income for the year and which has aggregated turnover of less than $50 million. ‘Base rate entity passive income’ is comprised of a specified list of income types including certain dividends, interest, royalties and rent.

Diverted profits tax rate - 40%

 

Private company loans (Division 7A)

  • Benchmark interest rate for 2019-20 — 5.37%

 

Superannuation

  • Complying superannuation fund tax rate (excluding non-arm's length component) — 15%
  • Complying superannuation fund tax rate (non-arm's length component) — 45%
  • Non-complying superannuation fund tax rate — 45%
  • Additional tax payable on concessional contributions of very high income earners* — 15%
  • Transfer balance cap (cap on the amount that can be transferred to the tax-free earnings retirement phase of superannuation) — $1,600,000
Superannuation contribution caps – year ending 30 June 2020
Type of superannuation contributionContributions cap**
Concessional (deductible)$25,000
Non-concessional (non-deductible)$100,000^

* Applies to individuals whose combined income for surcharge purposes (excluding reportable superannuation contributions) and concessionally taxed superannuation contributions exceed $250,000 for the income year.

** Amounts contributed in excess of the applicable cap may be subject to additional tax or included in the individual’s assessable income and taxed at their marginal tax rate. Individuals can choose to have up to 85 per cent of their excess concessional contributions for a financial year released from superannuation. Additionally, individuals can choose to withdraw excess non-concessional contributions plus associated earnings from superannuation.

^The non-concessional contribution cap is nil if a member’s total superannuation balance (TSB) is greater than or equal to the general transfer balance cap ($1.6 million for 2019-20) at 30 June in the previous financial year. Individuals under 65 years of age can make non-concessional contributions of up to $300,000 over a three-year period (known as the 'bringing forward rule').

Superannuation guarantee charge (SGC)

SGC is payable by employers if during 2019-20 they fail, in relation to each employee, to contribute 9.5% of the employee's ordinary time earnings (base capped at $55,270 per quarter).

 

Managed Investment Trusts (MITs)

  • MIT withholding tax rate for fund payments attributable to non-concessional MIT income - 30 %
  • MIT withholding tax rate for fund payments to a resident of an information exchange country* – 15%
  • MIT withholding tax rate for fund payments to an entity that is not a resident of an information exchange country* – 30%
  • “Clean building” MIT withholding tax rate for fund payments to a resident in an information exchange country* – 10%
  • Tax rate for non-arm’s length income derived by MIT – 30%

* An information exchange country is a country with which Australia has an effective exchange of information agreement and is prescribed by Regulation 34 of the Taxation Administration Regulations 2017.

 

Capital gains tax (CGT)

Net capital gains in respect of CGT assets acquired after 19 September 1985 are included in assessable income and taxed at marginal rates.

A CGT discount factor automatically applies to individuals and trustees (of 50%*) and to complying superannuation funds (of 33.33%) in respect of CGT assets acquired after 11.45am Australian Eastern Standard Time (AEST) on 21 September 1999 and held for at least 12 months before the time of the CGT event. The CGT discount is not available for foreign resident or temporary resident individuals in respect of gains accrued after 7.30pm (AEST) on 8 May 2012. The CGT discount remains available for capital gains accrued prior to this time where the relevant individual chooses to obtain a market valuation of assets as at 8 May 2012.

* The Government has announced that, from 1 January 2018 the CGT discount will be increased to 60% for resident individuals investing in affordable housing. The affordable housing must be managed through a registered community housing provider and held for a minimum period of three years.  As at 16 July 2019, this measure was not enacted.

Depreciation - plant and buildings

The rate of depreciation of a depreciating asset (plant) generally depends upon the date of acquisition, whether the taxpayer is a small business entity and the asset's effective life (self-assessed or as determined by the Commissioner).

Years in effective lifePrime cost (%)Diminishing value (%)*
250100
333.366.67
42550
52040
101020
156.6713.33
20510
303.36.67
402.55

* Diminishing value rates specified are applicable generally to assets first held on or after 10 May 2006.

Eligible taxpayers that carry on business and have aggregated turnover of up to $50 million can claim an immediate deduction for a depreciating asset that has a cost not exceeding $30,000 if the asset is acquired and first used or installed ready for use before 30 June 2020.

The construction cost of income producing buildings and structural improvements may be written off at the following rates where construction commenced on or after 27 February 1992^.

Qualifying buildings and structural improvementsAnnual deduction (%)
Short-term traveller accommodation4.0
Industrial buildings4.0
Other income producing buildings2.5
Structural improvements2.5

^ Where construction commenced prior to 27 February 1992, qualifying buildings may be written off at either 2.5% or 4% pa, depending on the date on which construction commenced.

  • Motor vehicle depreciation cost limit for 2019-20 – $57,581

 

Research and Development Tax Incentive

Under the Research and Development (R&D) tax incentive, entities may be eligible for a tax offset for expenditure on eligible R&D activities and for the decline in value of depreciating assets used for eligible R&D activities.

  • Refundable R&D tax offset - Generally only available to eligible entities with an aggregated turnover of less than $20 million
  • Non-refundable R&D tax offset

A $150 million cap (yet to be enacted) on the amount of R&D expenditure that companies can claim as a tax offset at the concessional rates applies. For expenditure over the cap, companies are able to claim a tax offset at the company tax rate.

For income years commencing from 1 July 2018, the Government proposes to change the current R&D regime and replace it with new R&D tax offset amounts that, if enacted, as at 16 July 2019 are proposed as follows:

  • Refundable R&D Tax offset - The claimant's tax rate for the year plus 13.5 percentage points (capped at $4 million per annum, except for R&D on clinical trials).
  • Non-refundable R&D Tax offset - The claimant's tax rate for the year, plus:
    • 4 percentage points for R&D expenditure between 0% and 2% R&D intensity (inclusive) (i.e. R&D expenditure as a percentage of the claimant's total expenses for the year);
    • 6.5 percentage points for R&D expenditure above 2% to 5% R&D intensity;
    • 9 percentage points for R&D expenditure above 5% to 10% R&D intensity; and
    • 12.5 percentage points for R&D expenditure above 10% R&D intensity.

 

 

Fringe benefits tax (FBT)

  • FBT rate for year ending 31 March 2020 – 47%
Type of aggregate fringe benefit amountFBT gross-up factor
Year ending
31 March 2020
Type 1 – entitlement to GST input tax credits2.0802
Type 2 – no entitlement to GST input tax credits1.8868
Key FBT figuresYear ending
31 March 2020
Benchmark interest rate for loan benefits5.37%
Car parking benefit threshold$8.95
Record keeping exemption threshold$8,714
Car fringe benefits statutory formula0.2*

* For contracts entered into from 7.30pm AEST 10 May 2011. Different rates may apply for contracts entered into before this date.

 

Petroleum Resource Rent Tax (PRRT)

PRRT applies to all offshore petroleum projects (except those in the Joint Petroleum Development area in the Timor Sea).

  • PRRT rate – 40%

Payroll tax rates and thresholds

State/TerritoryRate (%)Annual Threshold ($)1
NSW5.45900,000
ACT6.852,000,000
VIC4.85 / 2.4252650,000
QLD4.75 / 4.9531,300,0004
TAS6.1 / 4.051,250,000
SA2.5 / 4.9561,500,000
WA6.5 / 6.0 / 5.57850,0008
NT5.591,500,00010

1. The above thresholds may be reduced where the company is part of a group and/or pays interstate wages.

2. The lower 2.425% rate applies to business where at least 85% of their Victorian payroll goes to regional employees.

3. A rate of 4.95% applies to employers or groups of employers who pay more than $6.5 million in Australian taxable wages. A reduced rate of 4.75% applies to employers or groups of employers who pay $6.5 million or less in Australian taxable wages.  Regional employers may be entitled to a 1% discount on the applicable payroll tax rate.

4. A deduction may be available if total annual Australian taxable wages are less than $6.5 million. For annual Australian taxable wages over the $1.3 million threshold, the deduction reduces by $1 for every $4 of taxable wages over this amount. The deduction reduces to zero when your Australian taxable wages reach $6.5 million

5. A reduced rate of 4% applies for taxable wages between $1.25 million and $2 million per annum. An exemption applies for certain wages paid by an interstate business that has relocated to regional Tasmania.

6.  For employers paying annual taxable wages between $1.5 million and $1.7 million a reduced payroll tax rate applies which phases up to the general tax rate of 4.95% for payrolls above $1.7 million.

7. For employers paying annual taxable wages of $100 million or less – the general rate of 5.5% applies. For taxable wages of between $100 million and $1.5 billion – a marginal rate of 6% applies, and for employers paying taxable wages of $1.5 billion or more – a marginal rate of 6.5% applies.

8. This threshold reduces gradually for employers with annual taxable wages between $850,000 and $7.5 million. Businesses with annual taxable wages of $7.5 million or more will be subject to payroll tax at 5.5% on their entire taxable wages.

9. From 1  May 2018, a payroll exemption is available for up to two years in relation to wages paid to certain NT resident employees.

10. This threshold reduces by $1 for every $4 of wages over $1.5 million. Businesses with annual taxable wages of $7.5 million or more will be subject to payroll tax of 5.5% on their entire taxable wages.

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