You can use this income salary pay calculator to easily estimate how much tax you will need to pay based on your income. Our pay calculator lets you work out your take-home pay for the role or job you’ve been offered. It takes into consideration the superannuation and other appropriate taxes.
This calculator has also been updated with tax changes included in the 2023-24 Budget.
Helps you plan and outline the following:
- your amount of take-home income when both the tax and the Medicare levy are deducted;
- your marginal tax rate;
- the amount of Australian Income Tax you should pay.
How do gross income and net income differ?
Gross income is the total amount you earn before tax is deducted. Your take-home pay is what net income is.
How do salary and wages differ?
Salary is a fixed amount of money being paid for the work rendered to an employee by their employer. Wages are different since it is a variable amount being paid to an employee which is based from their hourly rate multiplied by the number of hours worked within a period of time. Salary is not in any way affected by the employee working lesser or greater hours, while wages can actually vary based on the total number of hours worked by the employee.
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Income Tax Defined
The tax that the government collects from you based on the total amount of income you’ve earned from your job is called the income tax. It also includes the income you gained from your assets, such as stock shares and ETFs. It is prepared annually, or per financial year like for this FY23/24 (dated from July 1, 2023 to June 30, 2024). You also state any claimable you have, either tax offsets or deductions.
What income tax rates are used based on one’s annual salary?
Based on your personal situation -these 2023-2024 income tax rates in the table indicate the amount of tax payable in every dollar for each income tax bracket:
Australian Resident Income Tax Rates
Definition of Gross Income
Gross income is your earnings before deductions (ie tax) are deducted.
Our pay calculator provides you to simply work out your take-home pay which you’ve been offered for a role or job. This tool considers also the superannuation and other appropriate taxes.
How much earnings is needed to make it taxable?
Per ATO’s advice, income tax is being paid for every dollar in excess of AUD$18,200. If you earn below this limit, then, it is non-taxable. Majority of the tax-paying population are also being charged a 2% Medicare levy.
How do you define taxable income?
As mentioned, income tax applies to income which is taxable. What then is taxable income? The definition of taxable income per ATO is as simple as this: it is the actual income you need to pay tax for. To put it simply – it is the amount remaining after deductions of all the expenses allowed to be claimed on one’s assessable income. Or, check this out: Taxable Income is equal to Assessable Income minus Allowable Deductions.
Tax needed for payment in Australia
What you’re going to pay as your income tax will be dependent on personal circumstances as well as several factors, such as: taxable income, residency status, the tax rate as well as the bracket which is applicable to you as per ATO’s guidelines. An Australian resident bearing a Tax File Number or TFN (for tax purposes) is entitled to $18,200 as ‘tax-free threshold.’ Australian Government’s Treasury’s information shows the biggest amounts of income tax are being paid by the high-income earners as expected. In fact, this was validated with statistics from the Organization for Economic Co-operation and Development (OECD) indicating that the Australians in general had a 23.6% net average tax rate in the past year which was a bit lower than their average of 25.9% for the same period.
How are taxes calculated?
An income tax in Australia is calculated depending on the total taxable income and the applicable appropriate tax rates based on several factors, like residency status. The Australia’s advanced tax system denotes that if you’re earning more, the more you will be paying in taxes as well. Being Australian residents – you will have to be taxed also based on your global income (meaning, from Australia and overseas). This income comes from salaries, bonuses, wages, pensions, rent, and commissions. It can also be earned from your tips and gratuities, work-related allowances, overtime pay and lastly, interest gains from your bank accounts every financial year.
Is there the so-called ‘Tax-free threshold’ and how much is it in Australia?
YES – the term ‘tax-free threshold’ means what you can produce as earnings in every financial year with no tax to pay at your end. Going by the ATO – $18,200 is the amount of tax-free threshold being implemented in Australia. So, if you are an Australian resident for tax purposes – the initial $18,200 in your income is absolutely tax-free for every financial year. Just remember that you will only pay tax if your earnings exceed the said limit.
What is a Tax Return?
The tax return is normally a settlement method done annually. As a taxpayer, you provide ATO with a report detailing all the income you’ve earned and deductions, including any taxes withheld. Upon receipt of your submission, the ATO then issues an assessment that confirms your computations are correct, along with the applicable income tax rates in Australia. Doing a tax return calculates any additional tax that you need to pay to the ATO or any refund if you have paid more than the tax calculated based on your taxable income.
Why is it a MUST to prepare a Tax Return?
If you’ve passed any of these following criteria, then you will have to determine if you may need to lodge a tax return in Australia:
- You have acquired a Tax File Number (TFN).
- You have performed work in Australia or for its welfare.
- You have obtained investment income from Australian sources which are not being withheld.
Once you’ve passed one of the criteria mentioned, you should proceed lodging a tax return. You can also inform the ATO where one is actually not obliged via a ‘Non-Lodgement Advice Form’ on each financial year. It is best to seek professional advice from tax experts if you are unsure on lodging a return or not.
Preparation of the Tax Return
Only 3 basic steps to prepare your tax return:
- Select the way you want it done.
- Collate all your data such as deductions and income.
- Submit the tax return after completion.
Lodging a tax return via electronic means is easier and faster through 2 ways:
- MyTax app
- Through your Tax agent
You can lodge a tax return manually through paper form, but this process usually takes a lot longer.
In general, the ATO prefers to distribute refunds electronically and will only make payments to bank accounts in Australia.
How can I increase my Tax Return prior 30 June?
You need to do these easy steps prior 30 June which might help improve your current financial year’s tax refund. Some suggestions to maximise tax-returns:
- Have all your paperwork organized.
- Do expense prepayments.
- Top up your superannuation.
- Purchase an asset intended for your business.
- Manage capital gains and losses.
Some tax deductions are useful as they can increase tax return and compensate for any other taxes you need to pay to the ATO. Apart from personal income tax, there are several other taxes applicable in Australia , including taxes intended for businesses.
If you need more information, you can check from ATO. These recommendations are for general use only so if you will be needing tax advice for specific requirements, it’s best to consult with tax experts.
How much is the tax I can re-claim or refund?
You may or may not get a refund after completing and submitting your tax return in Australia. Take note that your tax deductions (including the unreceipted items and tax deductions related to work), your income tax bracket, and the applicable income tax rate for a particular financial year are all regarded as components of your overall tax assessment, even if you may not be entitled for a refund.
Did you know that an estimated 75% of Australians have a combined annual tax deductions of about $37 billion? Figures from Australian Bureau of Statistics (ABS) show that the average total deduction is normally $2,576 even though 50% of the total taxpayers’ population is claiming less than $674. And the total tax revenues collected for the recent financial year FY19/20 reached a total of $552 billion. Now, that’s a number!!
How do I negotiate for my salary?
Money plays a big part in our career decisions. Unfortunately, a large chunk of the Australian population (or 51%) didn’t negotiate for their salaries while still on the recruitment phase of their present or most recent roles. In fact, a third (or 33%) did not even discuss their salary expectations.
We know that it is usually awkward to bring up the topic of the salary when you’re taking on a job but it is essential that you make an effort to do so.
Below are the 4 key tips you need to know when making salary negotiations:
- Study and know your industry’s present salary trends.
The more you’re informed about what role you’re pursuing as well as the existing market rates – then the more likely you’ll be able to decide on a suitable salary. - Set your baseline salary.
Know and stick to a figure where you’d walk away from the job. - Be open.
Ensure your worth as an employee matches with what you’re asking for. Once asked, inform your potential employers on your present salary as well as offers from competitors. - Get ready to discuss and negotiate.
Having negotiations is not an all-money matter. If your potential employer fails to meet your expected salary level, then check if you’d want to accept benefits like flexible time schedules or work-from-home arrangements, additional paid holiday leaves, employee bonus incentives and so on.
How do I negotiate for my salary expectations?
If a prospective employer offers to discuss salary with you, they’re most probably referring to the baseline salary. When a salary package is presented, it will usually include base salary, rewards or incentives, and other entitlements like annual paid leaves, sick leaves, superannuation, car plan or allowances and company bonuses. Know that it’s also noteworthy to be open to some options like alternative workplace arrangements other than salary – such as flexible time schedules or maybe additional time for vacations.
Being ready is basically the initial step if you want to get the best salary. Study and know how much salary people of your similar positions are getting at present. Decide based on your research and offer a salary range if asked for a number in your discussions – at the very least, this will give you some flexibility to bargain wisely.
How do I ask for an increase in my pay?
There are quite a few matters as unnerving like requesting for a pay increase, but if you are able to use the right words and you prepared well for it – then you have a higher likelihood of success. Read on:
- Check the internal policies of your company.
The first step you need to take is go and check if the organization or business entity you work for has some established processes for these pay increase requests. It may be helpful to speak to your HR Manager if there’s one in your company about the policy. Some groups have their annual performance reviews or discussions – this could be the appropriate time. Others may consider going through requests only when needed. What does your organization follow – is it the “Pay Band” basis where employees rise up the ladder incrementally? Or perhaps, negotiation is allowed? - Prepare by doing your research.
Before setting out in your salary discussions – ensure you’ve done your research and you know the industry pay standards for similar roles as yours. - Call for a scheduled meeting.
These types of discussions are not trivial – it is not definitely a topic that you can just bring up anytime, like in an office corridor or cafeteria. Discussions in pay rise should be scheduled formally in meetings. You may shoot an e-mail with a calendar invite to your superior with a request that you would like to have a salary discussion accordingly. - Recognize your value.
Remember that if you’re after a salary increase, you’ll first need to be backed up by solid experiences. Prove to your manager that you’re worth the pay. Make sure you can present concrete instances when you’ve delivered beyond expectations and show the benefits the efforts have brought to your company. Be proud of your achievements. - Set-up a back-up plan.
If your boss is not amenable to your salary increase request, you may have to ponder about other options. Make sure you are ready to propose alternatives which are likely to be approved, such as increased work arrangement flexibility, working lesser hours, a secondment or support for proposed trainings which can upgrade your skills.
