Taxing Wages 2024

Australia (2022-2023 Income tax year)

Abstract

This chapter includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by their employers. Results reported include the marginal and average tax burden for eight different family types.

Methodological information is available for personal income tax systems, compulsory social security contributions to schemes operated within the government sector, universal cash transfers as well as recent changes in the tax/benefit system. The methodology also includes the parameter values and tax equations underlying the data.

 

 

The national currency is the Australian dollar (AUD). For the 2022-2023 income tax year AUD 1.45 was equal to USD 1. The average full-time worker earned AUD 99 565 in 2022-2023.

Personal income tax system

Federal income tax

Tax unit

Members of a family unit are taxed separately. However, individual eligibility for some tax offsets, as well as liability for some taxes, levies and surcharges, are at least partially dependent on the circumstances of other members of an individual’s household.

Tax allowances and credits

1.1.2.1. Standard tax reliefs

• Basic reliefs: Income earned up to AUD 18 200 by resident taxpayers is subject to tax at a zero rate.

• Standard marital status reliefs: No relief available.

• Relief(s) for children: See Section 4.2 for more detail on transfers related to dependent children.

• Relief for social security contributions and other taxes: No such contributions are levied.

• Reliefs for low income earners: A tax offset worth a maximum of AUD 700 is available for low income earners called the Low Income Tax Offset. Taxpayers whose taxable income was less than or equal to AUD 37 500 in 2022-2023 are eligible to receive the full amount of the offset. Between taxable income ranges of AUD 37 501 and AUD 45 000, the offset is reduced by AUD 0.05 for every AUD 1 by which a taxpayer’s taxable income exceeds AUD 37 500. When taxable income exceeds AUD 45 000, the offset is further reduced by 0.015 AUD for every AUD 1. The offset is no longer available once a taxpayer’s taxable income exceeds AUD 66 667.

• Relief for mature age workers: No relief available.

• Relief for recipients of certain social security benefits: The Beneficiary Tax Offset is available for those who receive certain taxable social security benefits called ‘rebatable benefits’. It ensures that a person who is wholly or mainly dependent on rebatable benefits, and does not have any other taxable income, is not liable for income tax. The amount of the Beneficiary Tax Offset available to an individual is determined by the total amount of the rebatable benefit(s) they receive in an income year.

• Relief for taxpayers who maintain a dependant who is genuinely unable to work: A taxpayer who maintains a dependant who is genuinely unable to work due to invalidity or carer obligations may be eligible for the Dependent (Invalid and Carer) Tax Offset. This tax offset is worth a maximum of AUD 2 943 in 2022-2023. To qualify for the offset in 2022-2023, the combined adjusted taxable income of the taxpayer and their spouse (where one exists) should not exceed AUD 104 432. The amount of offset that may be received is reduced by AUD 0.25 for every AUD 1 by which the dependant's adjusted taxable income exceeds AUD 282 and is no longer available once the dependant’s adjusted taxable income exceeds AUD 12 054. This offset is not included in the Taxing Wages model.

• Relief for pensioners and seniors: The Seniors and Pensioners Tax Offset (SAPTO) is available to recipients of taxable Government Pensions, including Parenting Payment Single. The SAPTO is also available to Australians who meet all of the Age Pension eligibility criteria except the income and/or asset tests. The SAPTO is worth up to AUD 2 230 for a single taxpayer, up to AUD 1 602 for each member of a senior couple not separated by illness and AUD 2 040 for each member of a senior couple separated by illness. The offset is withdrawn at the rate of AUD 0.125 for every AUD 1 that a recipient’s income exceeds their relevant shade out threshold dependent on their circumstances. For a single taxpayer, the offset is withdrawn from AUD 32 279 and is no longer available once income reaches AUD 50 119. For members of a couple not separated by illness, the offset is withdrawn from a combined income of AUD 57 948 and is no longer available once combined income reaches AUD 83 580.

• Other: No other standard relief available.

1.1.2.2. Main non-standard tax reliefs applicable to an average worker include:

• Relief for superannuation: Contributions to a low income spouse’s superannuation attract an 18% rebate up to a maximum rebate of AUD 540. The income limit for a low income spouse is AUD 40 000. In 2022-2023, the Low Income Superannuation Tax Offset matches AUD 0.15 for each AUD 1 of concessional contributions from at least AUD 10 up to AUD 500 a year for eligible individuals with annual incomes up to AUD 37 000. In addition in 2022-2023, eligible individuals with incomes not exceeding AUD 57 016 can make non-concessional contributions and receive a co-contribution of 50%, up to a maximum of AUD 500. The co-contribution rate progressively decreases for incomes between AUD 42 016 and AUD 57 016, at a rate of AUD 0.03 per AUD 1 of income above AUD 42 016.

• Relief for private health insurance: For the 2022-2023 income year, there are different rebate amounts depending on age and income. For individuals below 65 years without dependants and with annual income for surcharge purposes below AUD 90 000 the rebate is 24.608% of the cost of cover for eligible private health care for the 2022-2023 income year. The same rebate rates apply for families (couples and individuals with at least one dependent child) below 65 years with annual income for surcharge purposes below AUD 180 000. The threshold is increased by AUD 1 500 for each dependent child after the first. The rebate percentages are reduced for individuals and families with annual incomes above these amounts. The rebate percentages are also higher for individuals and families aged 65 years or more.

• Other non-standard reliefs provided as deductions are:

  • subscriptions paid in respect of membership of a trade, business or professional association or union;

  • charitable contributions of AUD 2 or more to specified funds, authorities and institutions, including public benevolent institutions, approved research institutes for scientific research, building funds for schools conducted by non-profit organisations etc.; and

  • work-related expenses including cost of replacement of tools of trade, cost of provision and of cleaning protective clothing and footwear, travelling between jobs or travelling in the course of employment, and expenses related to working from home.

Tax schedule

General rates of tax - resident individuals

 

Taxable income (AUD)
Not less than		Not more than	Tax at general rates on total taxable income
0	18 200		NIL
18 201	45 000		AUD 0.19 for each AUD in excess of AUD 18 200
45 001	120 000		AUD 5 092 + AUD 0.325 for each AUD in excess of AUD 45 000
120 001	180 000		AUD 29 467 + AUD 0.370 for each AUD in excess of AUD 120 000
180 001 and over			AUD 51 667 + AUD 0.450 for each AUD in excess of AUD 180 000

To nominally contribute towards the cost of basic medical and hospital care, a Medicare levy is imposed on the taxable incomes of resident taxpayers. In 2022-2023 the levy is applied at the rate of 2.0% of the taxable income of an individual.

Certain thresholds are applied before the Medicare levy is imposed. For taxpayers aged under Age Pension age in 2022-2023, an individual was not liable for the levy where their taxable income did not exceed AUD 24 276. A taxpayer in a couple or sole parent family who is not receiving Parenting Payment (see section 4.2), does not pay the levy if the taxable family income does not exceed AUD 40 939. Individual senior Australians of Age Pension age were not liable to pay the levy where their taxable income did not exceed AUD 38 365. Pensioner families (including couples and sole parents on Parenting Payment) and senior Australian families of Age Pension age did not become liable to pay any Medicare levy until their combined income in 2022-2023 exceeded AUD 53 406. The thresholds are increased by AUD 3 760 for each dependent child.

Where an individual’s or family’s taxable income exceeds these thresholds, the Medicare levy shades in at a rate of 10% of the excess taxable income over the threshold, until the levy is equal to 2.0% of the individual’s or family’s total taxable income.

Individual taxpayers who had income for surcharge purposes greater than AUD 90 000 in 2022-2023 (or if a couple had a combined income greater than AUD 180 000 plus AUD 1 500 for each dependent child after the first child) but who did not have a complying private health insurance policy, were liable for the Medicare levy surcharge. The surcharge rates are 1%, 1.25% and 1.5% depending on the taxpayer’s income for surcharge purposes above these thresholds. The surcharge rate is applied as a flat rate on their taxable income, reportable fringe benefits and any amount on which family trust distribution tax has been paid. However, the majority of taxpayers with income above the thresholds purchase a complying policy and avoid incurring the surcharge. The surcharge is therefore not included in the Taxing Wages calculations.

State and local income taxes

In Australia, no states or territories levy a tax based on a resident’s income.

Social security contributions

Employees’ contributions

None. There is, however, a Medicare Levy which is based upon taxable income. See Section 1.1.3.

Employers’ contributions

No contributions are collected from employers or employees specifically for pensions, sickness, unemployment or work injury benefits, family allowances or other benefits.

Part of Australia’s retirement income system is the provision of compulsory employer contributions (the Superannuation Guarantee system). In 2022-2023 the Superannuation Guarantee required employers to pay 10.5% on top of employees’ gross ordinary time earnings to an approved superannuation fund. There is also a limit to the Superannuation Guarantee. In each quarter any earnings beyond a threshold are not covered by the Superannuation Guarantee. This threshold is indexed to a measure of average earnings. In the 2022-2023 tax year this threshold was AUD 60 220 per quarter. The Superannuation Guarantee rate will increase by 0.5 percentage points each year until it reaches 12% in 2025-26.

These contributions are not reflected in the Taxing Wages calculations because they are not a form of taxation (they are not an unrequited transfer to general government). While employers are legislatively required to make contributions to approved superannuation funds, superannuation funds are private, although subject to regulation. Employers’ contributions are generally made to individual accounts and form part of employees’ personal superannuation assets. Some defined benefit schemes for public sector employees and private defined benefit schemes also exist. The employee may take superannuation benefits as either a lump sum payment or pension on retirement. Accordingly, superannuation contributions are reflected in the Non-Tax Compulsory Payment calculations.

Other taxes

Pay-roll tax

Australian State Governments levy pay-roll taxes on wages, cash or in kind, provided by larger employers to their employees. The rates of pay-roll tax, thresholds and deductions differ between States. In New South Wales, the State with the largest population, the pay‑roll tax rate in 2022-2023 was 5.45% for employers with total Australian wages in excess of AUD 1 200 000. Employers are entitled to an exemption from tax, or a pro-rated pay-roll tax threshold, on wages paid in New South Wales up to a maximum of AUD 1 200 000. The exempt amount is reduced based on the proportion of the employer’s New South Wales pay-roll to its total Australian pay-roll.

Universal cash transfers

Transfers related to marital status

There are no cash transfers made on a universal basis to married couples.

Transfers related to dependent children

• Family Tax Benefit Part A (FTB(A)) is paid to a parent, guardian or an approved care organisation to help families meet the costs of raising children. For 2022-2023, the maximum rate of FTB(A) is payable where the combined adjusted taxable income of the family does not exceed AUD 58 108, after which it tapers at a rate of AUD 0.20 per AUD 1 of income until an income limit that is determined by the number and age of dependent children. The base rate of FTB(A) is payable where the combined adjusted taxable income of the family is between the income limit and AUD 103 368, after which the payment shades out at the rate of AUD 0.30 per AUD 1 of income over the ceiling until the payment is nil. The base rate of payment is AUD 1 657.10 per annum for dependent children aged under 18 and for dependent full time students aged 16 to 19. A higher FTB(A) benefit is available for lower income earners, and the value of this benefit is dependent on the age and number of children. For 2022-2023 families may receive a maximum payment of AUD 5 161.10 for each child aged under 13 years and AUD 6 712.35 for each child aged 13 to 15 years and for each child aged 16 to 19 in full time secondary school. For 2022-2023 an end of year supplement of AUD 817.60 per child is also available for families with a combined adjusted taxable income of less than AUD 80 000. For 2022-2023, the higher benefit tapers out at the rate of AUD 0.20 for each AUD 1 of income over AUD 58 108 until the base payment is reached. However, people receiving any social security allowances or pensions automatically qualify for the maximum higher benefit. The attached calculations assume each dependant is between 5 and 12 years of age.

• Family Tax Benefit Part B (FTB(B)) is targeted at couples with one main income and sole parent families. Eligibility for FTB(B) if you are a single parent or grandparent carer is contingent upon having a child under the age of 16 or a qualifying dependent full-time student up to of the end of the calendar year they turn 18. Eligibility for FTB(B) if you are a member of a couple with one main income is contingent upon having a dependent child aged under 13. There are two separate income tests applied to the parent(s). The parent earning the higher amount (or the sole parent, in the case of single parent families) must have an adjusted taxable income less than AUD 104 432 for the financial year for the family to be eligible. A secondary earner income threshold is also applied to the parent earning the lower amount. For 2022-2023, this threshold is AUD 6 059, above which the entitlement is reduced by AUD 0.20 for each AUD 1 of income. There is no secondary earner income test applied to sole parents. For 2022-2023, the maximum payment is AUD 3 460.20 (including a one-off supplement of AUD 397.85 paid at the end of the financial year) if the youngest dependent child is aged between 5 and 15 (or up to the end of the calendar year they turn 18 years if the dependent child is a full-time student), and AUD 4 785.15 (including a one-off supplement of AUD 397.85 paid at the end of the financial year) if there is at least one child under 5 years. The attached calculations assume each dependant is between 5 and 12 years of age.

• Recipients of the Family Tax Benefit may elect to receive the benefit in fortnightly instalments or as an end of year lump sum payment.

• A Newborn Supplement and Newborn Upfront Payment may be paid to families for each baby born from 1 March 2014. To be eligible families will need to be eligible for FTB(A) and not be accessing Parental Leave Pay for that child. For multiple births, Parental Leave Pay may be payable for one child and Newborn Supplement for the other child or children. The total value of the Newborn Supplement and Newborn Upfront Payment in 2021-2022 is up to AUD 2 380.42 for the first child (and all multiple births) and up to AUD 1 191.05 for subsequent children.

• Paid Parental Leave is provided through two payments, Parental Leave Pay (PLP) and Dad and Partner Pay (DAPP). PLP provides the primary carer of a child with 18 weeks’ pay at the national minimum wage (AUD 812.45 per week before tax in 2022-2023), in the year following the child’s birth or adoption. The primary carer must have worked for at least 10 of the 13 months prior to the birth or adoption, and for at least 330 hours in that 10 month period with no more than a twelve week gap between two working days. The primary carer’s adjusted taxable income must be equal to or less than an income test threshold in the financial year prior to the date of claim or date of birth or adoption, whichever is earlier. The income test threshold is AUD 168 865 for the 2022-23 financial year. PLP and Newborn Supplement cannot be paid for the same child. A person cannot claim FTB(B) while they are receiving PLP.

• Dad and Partner Pay (DAPP) provides the father or partner of the primary carer of a child with two weeks’ pay at the national minimum wage (AUD 812.45 per week before tax in 2022-2023), in the year following the child’s birth or adoption. The father or partner must have worked for at least 10 of the 13 months prior to the birth or adoption and for at least 330 hours in that 10 month period with no more than a twelve week gap between two working days. The father or partner’s adjusted taxable income must be equal to or less than the income test threshold in the financial year prior to the date of claim or date of birth or adoption, whichever is earlier. The income test threshold is AUD 168 865 for the 2022-23 financial year. DAPP and PLP may be paid for the same child.

• Child Care Subsidy (CCS) is a means-tested payment which assists families with the cost of approved childcare services. CCS is payable to eligible families with incomes up to AUD 356 756. A percentage of the cost of childcare is subsidised, up to a cap, with the applicable percentage varying from 85 per cent for families with income less than AUD 72 466 to 20 per cent for families with income between AUD 346 756 and AUD 356 756. Families with more than one child aged 5 or under received a higher subsidy of 30 percentage points more for the second and subsequent children than the applicable percentage for the first child in care, up to a maximum of 95 per cent. CCS to families with income above AUD 190 015 was capped until 10 December 2021 at AUD 10 655 per child. In 2022-23, there was no annual cap on the CCS. The attached calculations assume no childcare usage.

Other transfers

Income support payments in Australia are assessed on fortnightly income. The descriptions below present annualised estimates of fortnightly rates and thresholds by summing up applicable rates across the 2022‑23 year. The modelled results presented in Taxing Wages 2022-23 reflect people who have constant income over an entire year. In practice, it is common for fortnightly payment values to fluctuate as recipients’ circumstances change.

JobSeeker Payment

JobSeeker Payment is the primary taxable payment payable to people aged from 22 years to Age Pension age (66 years and 6 months in 2022-23) who are unemployed or are regarded as unemployed. JobSeeker Payment is also payable to a member of a couple if their youngest child is aged 6 years or more and to single parents if their youngest child is aged 8 years or more. It is conditional on recipients fulfilling a personal Job Plan, which typically involves taking part in activities such as job seeking or training. In 2022‑23 the annual JobSeeker amount for singles without dependants was AUD 17 397.10 and for partnered individuals was AUD 15 843.30. Recipients are also eligible for an Energy Supplement, and potentially other supplementary payments. These payments taper out at a rate of AUD 0.50 per AUD 1 for incomes between AUD 3 900 and AUD 6 656, and reduce at a rate of AUD 0.60 per AUD for incomes over AUD 6 656. Under the thresholds and taper rates that applied in 2022-2023, the JobSeeker payment may be available to some full-time workers under the OECD definition of 30 or more hours of work per week. The JobSeeker Payment for partnered individuals reduces by AUD 0.60 for each AUD 1 of their partner’s income above AUD 31 142.44. For single principal carers with dependent child or children, it reduced at a rate of AUD 0.40 per AUD 1 for incomes over AUD 3 900.

Parenting Payment

Parenting Payment is a taxable payment payable to low income families with responsibility for the care of a young child. Partnered persons are eligible if they have a qualifying child under six years of age, and sole parents are eligible if they have a qualifying child under eight years of age.

In 2022-2023 the maximum annual amount of Parenting Payment (Partnered) (PP(P)) was AUD 15 843.30. Only one parent in a couple can be entitled to PP(P). The maximum annual amount of Parenting Payment (Single) (PP(S)) in 2022-23 was AUD 23 826.50. Recipients are also eligible for an Energy Supplement, and potentially other supplementary payments. These payments are subject to income and assets tests. The PP(P) tapers out at a rate of AUD 0.50 per AUD 1 of income over AUD 3 900 up to AUD 6 656, and reduces at a rate of AUD 0.60 per AUD 1 for income over AUD 6 656. Under the PP(P) income test, a spouse receives a reduced Parenting Payment, tapering at a rate of AUD 0.60, when the higher earning partner’s income exceeds AUD 31 142.44. If the spouse has little or no income (less than AUD 3 900 per annum), he or she would not receive any Parenting Payment when the higher earning partner’s income exceeds AUD 57 890.28. PP(S) reduces by AUD 0.40 for each AUD 1 of income above AUD 5 267.60 plus AUD 639.60 for each child other than the first.

Pharmaceutical Allowance

Pharmaceutical Allowance (PA) is a non-taxable supplementary payment payable to eligible persons to help with medicine costs; for example, persons who receive the PP(S). PA is added to the maximum basic rate of PP(S) before a person’s PP(S) entitlement is calculated. Anyone with a PP(S) entitlement, after PA has been added, receives the full amount of PA. For 2022-2023, the payment is AUD 166.40 for singles and AUD 83.20 for coupled individuals.

Telephone Allowance

A non-taxable Telephone Allowance is available on a quarterly basis to eligible individuals, including individuals who receive PP(S). The basic rate of the Telephone Allowance is AUD 131.75 for 2022-2023.

Energy Supplement

The Energy Supplement (ES) is an extra payment to help with energy costs, paid alongside certain income support payments. The ES is not indexed. The amount of the supplement varies depending on the main income support payment. FTB(A) and FTB(B) recipients are only eligible for the ES if they have been continuously eligible for their payment since 19 September 2016.

• For eligible FTB(A) recipients, the maximum amount of ES is AUD 91.25 per year for each child under 13 years and AUD 116.80 for each child aged 13 to 19 years.

• For eligible FTB(B) recipients, the amount of ES is AUD 73.00 per year for each child under 5 years, and AUD 51.10 per year for each child aged 5 to 18 years.

• Recipients of PP(P) receive AUD 205.40 annually, and recipients of PP(S) receive AUD 312.

• For JobSeeker Payment recipients, the ES is AUD 228.80 annually for singles without dependents, and AUD 205.40 for partnered individuals.

The calculations assume families and individuals are eligible for the energy supplement as a significant proportion of FTB(A) and FTB(B) recipients were eligible for the supplement in 2022-2023.

Recent changes in the tax/benefit system

Cessation of the Low and Middle Income Tax Offset (LMITO)

The Low and Middle Income Tax Offset was a tax offset available to taxpayers with a taxable income that was equal to or less than AUD 126 000 between the income years of 2018-19 and 2021-22. For the 2021‑‑22 income year, LMITO was increased by AUD 420. This increased the base amount to AUD 675 and the full amount to AUD 1500. Taxpayers whose taxable income was less than or equal to AUD 37 000 in 2021-2022 were eligible to receive AUD 675. The offset was increased by AUD 0.075 for every AUD 1 by which a taxpayer’s taxable income exceeded AUD 37 000, up to a maximum of AUD 1 500 when the taxpayer’s earnings were between AUD 48 000 and AUD 90 000. The offset was then reduced by AUD 0.03 for every AUD 1 by which a taxpayer’s earnings exceeded AUD 90 000 and was no longer available once a taxpayer’s taxable income was AUD 126 000 or more. The LMITO ceased on 30 June 2022.

Cessation of the Pandemic Leave Disaster Payment and introduction of the High-Risk Settings Pandemic Payment

The Pandemic Leave Disaster Payment (PLDP) was announced by the Australian Government on 3 August 2020 after several state governments introduced payments for those without access to paid leave entitlements or Australian Government income support, and who were required to isolate or quarantine due to COVID-19. The payment initially provided AUD 1 500 for each 14-day period a person must self-isolate, quarantine or care for a person with COVID-19. On 10 December 2021, the payment was reduced to AUD 750 when isolation periods were halved to 7 days. On 18 January 2022, two different rates of payment were introduced:

• AUD 750 per seven-day period for those who expected to lose 20 hours of work during their isolation/quarantine/care period

• AUD 450 per seven-day period for those who expected to lose at least a whole day’s work or up to 19 hours during their isolation/quarantine/care period

The payment was taxable. This payment ceased on 30 September 2022 and has not been modelled in Taxing Wages 2022-23, as it was paid on an ad-hoc basis.

To replace the PLDP, a new High-Risk Settings Pandemic Payment (HRSPP) was introduced on 15 October 2022. This payment provided support to employees who worked in a high-risk setting without access to paid leave entitlements or Australian Government income support, and were unable to work due to COVID-19. High-risk settings included aged care, disability care, Aboriginal healthcare, and hospital care sectors. The payment was taxable, and payments were made at the same rate as the applicable PDLP rates. The HRSPP ceased on 31 March 2023 and has not been modelled as it was paid on an ad-hoc basis to a specific subset of workers.

Changes to Superannuation Guarantee

Before 1 July 2022, Superannuation Guarantee did not have to be paid for a worker earning less than AUD 450 a month. From 2022-23 onwards, this threshold was removed. Superannuation Guarantee must now be paid regardless of a worker’s earnings.

Memorandum items

Identification of an average worker

The source of the information used in replying to the questionnaire was the Australian Bureau of Statistics (ABS) publication Average Weekly Earnings — Australia. The survey is now conducted on a biannual basis (it was previously conducted on a quarterly basis up to the June 2012 quarter) and is based on a representative sample of employers in each industry. As a result of this change in frequency, average weekly earnings for the 2022-23 income tax year have been calculated as the average of the two biannual figures (November 2022 and May 2023 (released in August 2023)).

In August 2009, the ABS redesigned the survey and replaced the industry classification based on the 1993 edition of the Australian and New Zealand Standard Industrial Classification (ANZSIC), which had been in use since 1994, with the 2006 edition of ANZSIC. The 2006 edition of ANZSIC was developed to provide a more contemporary industrial classification system, taking into account issues such as changes in the structure and composition of the economy, changing user demands and compatibility with major international classification standards. Accordingly, the average wage figure for 2010 and later years is inconsistent with that provided for previous years.

All wage and salary earners who received pay for the reference period are represented in the Survey of Average Weekly Earnings (AWE), except:

• members of the Australian permanent defence forces;

• employees of enterprises primarily engaged in agriculture, forestry and fishing;

• employees of private households;

• employees of overseas embassies, consulates, etc.;

• employees based outside Australia; and

• employees on workers’ compensation who are not paid through the payroll.

Also excluded are the following persons who are not regarded as employees for the purposes of this survey:

• casual employees who did not receive pay during the reference period;

• employees on leave without pay who did not receive pay during the reference period;

• employees on strike, or stood down, who did not receive pay during the reference period;

• directors who are not paid a salary;

• proprietors/partners of unincorporated businesses;

• self-employed persons such as subcontractors, owner/drivers, consultants;

• persons paid solely by commission without a retainer; and

• employees paid under the Parental Leave Pay Scheme.

The sample for the AWE survey, like most ABS business surveys, is selected from the ABS Business Register which is primarily based on registrations with the Australian Taxation Office's (ATO) Pay As You Go Withholding (PAYGW) scheme (and prior to 1 June 2000 the Group Employer (GE) scheme). The population is updated quarterly to take account of:

• new businesses;

• businesses which have ceased employing;

• changes in employment levels;

• changes in industry; and

• other general business changes.

Earnings comprise weekly ordinary time earnings and weekly overtime earnings.

Weekly ordinary time earnings refers to one week’s earnings of employees for the reference period attributable to award, standard or agreed hours of work. It is calculated before taxation and any other deductions (e.g. board and lodging) have been made. Included in ordinary time earnings are award, workplace and enterprise bargaining payments, and other agreed base rates of pay, over award and over agreed payments, penalty payments, shift and other allowances; commissions and retainers; bonuses and similar payments related to the reference period; payments under incentive or piecework; payments under profit sharing schemes normally paid each pay period; payment for leave taken during the reference period; all workers’ compensation payments made through the payroll; and salary payments made to directors. Excluded are overtime payments, retrospective pay, pay in advance, leave loadings, severance, termination and redundancy payments, and other payments not related to the reference period.

Weekly overtime earnings refers to payment for hours in excess of award, standard or agreed hours of work.

Employers’ contribution to private health and pension scheme

In Australia very few employers make any contributions towards health schemes for their employees, especially where the employee is at a wage level comparable to that of an average production worker.

Employer contributions to pension schemes are primarily through the superannuation system. This is described in section 2.2.

2023 Parameter values

 

Average earnings/yr	Ave_earn	99 565
Low Income Tax Offset	low_inc_cr	700
	low_inc_lim	37500
	low_inc_redn	0.05
	low_inc_lim_2	45000
	low_inc_redn_2	0.015
	low_inc_lim_3	66667
Tax schedule	tax_sch	0.000	18200
		0.190	45000
		0.325	120000
		0.370	180000
		0.450
Medicare levy	medic_rate	0.02
exemption limits	sing_lim	24276
married	m_lim	40939
sing parent receiving PPS	SAPTO_lim	53406
+ per child	ch_lim	3760
shading-in rate	shade_rate	0.1
Part A FTB max	FTB_A_max	5161.1
Part A FTB basic	FTB_A_base	1657.1
part A income limit 1	FTB_A_lim1	58108
part A income limit 2	FTB_A_lim2	103368
reduction rate 1	FTB_A_taper1	0.2
reduction rate 2	FTB_A_taper2	0.3
additional limit2 per extra child	FTB_A_child	0
Large family supplement	FTB_A_large	0
Part A FTB Energy Supplement (ES) max	FTB_A_CES_max	91.25
Part A FTB ES basic	FTB_A_CES_basic	36.5
Part A FTB max end of year supplement	FTB_A_supp	817.6
Part A FTB max end of year supplement threshold	FTB_A_supp_lim	80000
Part B FTB	FTB_B	3460.2
part B partner income limit	FTB_B_lim	6059
reduction rate	FTB_B_taper	0.2
income limit (primary earner)	FTB_B_lim_p	104432
Part B FTB ES no child <5 years old	FTB_B_CES_5	51.1
Single Income Family Supplement max rate	SIFS_max	0
Single Income Family Supplement phase-in threshold	SIFS_in_lim_pr	68000
Single Income Family Supplement taper in Rate - primary earner	SIFS_in_taper_pr	0.025
Single Income Family Supplement phase-out threshold (primary earner)	SIFS_out_lim_pr	120000
Single Income Family Supplement taper out rate (primary earner)	SIFS_out_taper_pr	0.01
Single Income Family Supplement phase out threshold (secondary earner)	SIFS_out_lim_sec	16000
Single income family supplement phase out taper - secondary earner	SIFS_out_taper_sec	0.15
Parenting payment single	PPS	23827
reduction rate	PPS_taper	0.4
income limit	PPS_lim	5267.6
additional limit per child	PPS_ch_lim	639.6
Parenting payment single Energy Supplement (ES)	PPS_CES	312
Pharmaceutical allowance	PA	166.4
State pay-roll tax rate (NSW)	Pay_roll_rate	0.0545
Additional parameters
JobSeeker Payment single rate	NSAS	17397
JobSeeker Payment single ES	NSAS_CES	229
JobSeeker Payment partnered rate	NSAP	15843
JobSeeker Payment partnered ES	NSAP_CES	205.4
reduction rate 1	NSA_taper1	0.5
reduction rate 2	NSA_taper2	0.6
income limit 1	NSA_lim1	3900
income limit 2	NSA_lim2	6656
Senior Australian and Pensioner Tax Offset	SAPTO	2230
Senior Australian and Pensioner Tax Offset Maximum Section 159N rebate	SAPTO_Max_159N	445
Senior Australian and Pensioner Tax Offset single threshold	SAPTO_thresh	32279
Senior Australian and Pensioner Tax Offset taper rate	SAPTO_taper	0.125
SchoolKids Bonus	SKB	0
	SKB_lim
Telephone allowance	Tele_A	131.75

2023 Tax Equations

The equations for the Australian system in 2023 are mostly repeated for each individual of a married couple. However, the spouse credit is relevant only to the calculation for the principal earner and the calculation of the Medicare levy uses shading-in rules which depend on the levels of earnings of the spouses. The basis of calculation is shown by the Range indicator in the table below.

The functions which are used in the equations (Taper, MIN, Tax etc) are described in the technical note about tax equations. Variable names are defined in the table of parameters above, within the equations table, or are the standard variables “married” and “children”. A reference to a variable with the affix “_total” indicates the sum of the relevant variable values for the principal and spouse. And the affixes “_princ” and “_spouse” indicate the value for the principal and spouse, respectively. Where the calculation for one earner considers variables for the other earner, the affix "_oth" is used. Equations for a single person are as shown for the principal, with “_spouse” values taken as 0.

 

	Line in country table and intermediate steps	Variable name	Range	Equation
1.	Earnings	earn
2.	Allowances	tax_al	B	0
3.	Credits in taxable income:
	Credits in taxable income of principal	taxbl_cr_princ	B	IF(AND(Children>0,Married=0),Taper(PPS,earn_princ,PPS_lim+PPS_ch_lim*(Children-1),PPS_taper),IF(AND(Children=0,Married=0),taper2(NSAS,earn_princ,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2),IF(Married>0,taper3(NSAP,earn_princ,earn_spouse,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2,NSAP_CES),,0)))
	Credits in taxable income of spouse	taxbl_cr_spouse	B	IF(AND(Children>0,Married=0),0,IF(AND(Children=0,Married=0),0,IF(Married>0,taper3(NSAP,earn_spouse,earn_princ,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2,NSAP_CES),0)))
4.	CG taxable income	tax_inc	B	earn+taxbl_cr
5.	CG tax before credits
	Medicare Levy	med_levy	B	medicare(tax_inc,sing_lim,m_lim,SAPTO_lim,ch_lim,shade_rate,medic_rate,Married,tax_inc_oth,Children)
	Tax liability	liab	P	Tax(tax_inc, tax_sch)
6.	Tax credits :
	Low Income Tax Offset	low_cr	B	LITO(Tax_Inc,low_inc_lim,low_inc_cr,low_inc_lim_2,low_inc_redn,low_inc_lim_3,low_inc_redn_2)
	Senior Australian and Pensioner Tax Offset	sap_cr	P	IF(AND(taxbl_cr_princ>0,NOT(AND(Children>0,Married=0))),Tax(taxbl_cr_princ,tax_sch),IF(taxbl_cr_princ>0,Taper(SAPTO,tax_inc,SAPTO_thresh,SAPTO_taper),0)
	Beneficiary tax offset	ben_cr	B	IF(AND(taxbl_cr>0, NOT(AND(Children>0, Married=0))), Tax(taxbl_cr, tax_sch), 0)
	Total	tax_cr	B	low_cr+sap_cr+ben_cr
7.	CG tax	CG_tax	B	Positive(liab-tax_cr) + med_levy
8.	State and local taxes	local_tax	B	0
9.	Employees' soc security	SSC	B	0
11.	Cash transfers:
	Family Tax Benefit (Part A)	ftbA	J	IF(PA>0,((FTB_A_max+FTB_A_CES_max+IF(earn_princ+earn_spouse<FTB_A_supp_lim,FTB_A_supp,0))*Children+IF(Children>2,(Children-2)*FTB_A_large,0)),MAX(((FTB_A_max+FTB_A_CES_max+IF(earn_princ+earn_spous<FTB_A_supp_lim,FTB_A_supp,0))*Children-Positive((earn_princ+earn_spous+taxbl_cr_princ+taxbl_cr_spouse)-FTB_A_lim1)*FTB_A_taper1),Positive((FTB_A_base+FTB_A_CES_basic)*Children-Positive((earn_princ+earn_spous+taxbl_cr_princ+taxbl_cr_spouse)-(FTB_A_lim2+(Positive(Children-1))*FTB_A_child))*FTB_A_taper2)))
	Family Tax Benefit (Part B)	ftbB	J	IF(earn_princ<FTB_B_lim_p,IF(Children>0,Taper((FTB_B+FTB_B_CES_5),earn_spouse+taxbl_cr_spouse,FTB_B_lim,FTB_B_taper),0),0)
	Pharmaceutical Allowance	PA	J	AND(Children>0,Married=0)*IF(Taper(PPS+PA+PPS_CES,earn_princ,PPS_lim+PPS_ch_lim*(Children-1),PPS_taper)>0,PA,0)
	Energy Supplement	CES	J	IF(AND(Children>0,Married=0,Taper(PPS+PPS_CES,earn_princ,PPS_lim+PPS_ch_lim*(Children-1),PPS_taper)>0),MAX(0,Taper(PPS+PPS_CES,earn_princ,PPS_lim+PPS_ch_lim*(Children-1),PPS_taper)-Taper(PPS, earn_princ,PPS_lim+PPS_ch_lim*(Children-1),PPS_taper)),IF(AND(Children>0,Married=0,Taper(PPS+PPS_CES,earn_princ,PPS_lim+PPS_ch_lim*(Children-1),PPS_taper)=0),0,IF(AND(Children=0,Married=0,taper2(NSAS+NSAS_CES,earn_princ,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2)>0),taper2(NSAS+NSAS_CES,earn_princ,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2)-taper2(NSAS,earn_princ,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2),IF(AND(Married>0,taper3(NSAP,earn_spouse,earn_princ,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2,NSAP_CES)>0),taper3(NSAP,earn_spouse,earn_princ,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2,NSAP_CES)-taper3(NSAP,earn_spouse,earn_princ,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2,NSAP_CES-NSAP_CES)))))+IF(AND(Married>0,taper2(NSAP+NSAP_CES,earn_princ,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2)>0),max(0, taper2(NSAP+NSAP_CES,earn_princ,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2)- taper2(NSAP,earn_princ,NSA_lim1,NSA_lim2,NSA_taper1,NSA_taper2)),0)
	SchoolKids Bonus	SKB	J	0
	Single Income Family Supplement	SIFS	J	sifs(tax_inc_princ,tax_inc_spouse,ftbA+ftbB,SIFS_max,SIFS_in_lim_pr,SIFS_in_taper_pr,SIFS_out_lim_pr,SIFS_out_taper_pr,SIFS_out_lim_sec,SIFS_out_taper_sec)
		cash_trans	J	ftbA+ftbB+taxbl_cr_princ+PA+taxbl_cr_spouse+Tele_A +CES+SKB+SIFS
	Telephone Allowance	TA	B	IF(Married=0,IF(Children>0,IF(Taper(PPS+PA+PPS_CES,earn_princ,PPS_lim+PPS_ch_lim*(Children-1),PPS_taper)>0,Tele_A,0),0),0)
	Employer’s State pay-roll tax	tax_empr	B	(earn+SG_rate*min(earn,SG_ceil))*Pay_roll_rate

Key to range of equation B calculated separately for both principal earner and spouse P calculated for principal only (value taken as 0 for spouse calculation) J calculated once only on a joint basis. Key refers to an optimisation of benefits i.e. Parenting Payment for principal and JobSeeker Payment for spouse versus Parenting Payment for spouse and JobSeeker Payment for principal.