Taxing Wages 2020

Australia

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 public 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 2018-2019 income tax year AUD 1.44 was equal to USD 1. The average worker earned AUD 87 827 in 2018-2019.

1. Personal income tax system

1.1. Federal income tax

1.1.1. Tax unit

Members of the family are taxed separately.

1.1.2. 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 445 is available for low income earners called the Low Income Tax Offset. Taxpayers whose taxable income was less than AUD 37 000 in 2018-2019 are eligible to receive the full amount of the offset. The offset is reduced by AUD 0.015 for every AUD 1 by which a taxpayer’s taxable income exceeds AUD 37 000 and is no longer available once a taxpayer’s taxable income exceeds AUD 66 667.

• Reliefs for Low and Middle Income Earners: A tax offset worth a maximum of AUD 1080 is available for taxpayers with earnings up to AUD 126 000 called the Low and Middle Income Tax Offset. Taxpayers whose taxable income was less than AUD 37 000 in 2018-2019 are eligible to receive AUD 255. The offset is increased by AUD 0.075 for every AUD 1 by which a taxpayer’s taxable income exceeds AUD 37 000 up to a maximum of AUD 1 080 when the taxpayer’s earnings are between AUD 48 000 and AUD 90 000. The offset is then reduced by AUD 0.03 for every AUD 1 by which a taxpayers earnings exceed AUD 90 000 and is no longer available once a taxpayer’s taxable income exceeds AUD 126 000.

• 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 receives a rebatable benefit does not pay any tax on that income. 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 2 717 in 2018‑2019. To qualify for the offset, the combined adjusted taxable income of the taxpayer and their spouse (where one exists) should not exceed AUD 100 000 in 2018-2019. The amount of offset that may be received is reduced by AUD 1 for every AUD 4 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 11 150. 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. SAPTO is also available to Australians who meet all of the Age Pension eligibility criteria except the income and/or asset tests. 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 effective tax free threshold. For a single taxpayer, this means that 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. In 2018-2019, 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 2018-19, eligible individuals with incomes not exceeding AUD 52 697 can make non concessional contributions and receive a co-contribution of 50%, up to a maximum of AUD 500.

• Relief for private health insurance: For the 2018-2019 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 25.415% from 1 July 2018 to 31 March 2019 and 25.059% until 30 June 2019 of the cost of cover for eligible private health care. 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 rebate is 25.415% from 1 July 2018 to 31 March 2019 and 25.059% until 30 June 2019 of the cost of cover for eligible private health care. 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.

• Relief for medical expenses: In 2018-2019, there is an offset for annual net out-of-pocket medical expenses. Eligibility for the offset is based on annual income. This offset is being phased out, so for the 2018-2019 income year, it is only available to individuals who have medical expenses relating to disability aids, attendant care or aged care. Single taxpayers with an adjusted taxable income (ATI) of AUD 90 000 or less, and families with ATI below AUD 180 000 (plus AUD 1 500 for each additional dependent child after the first), are able to claim 20% of medical expenses over AUD 2 377. Single taxpayers and families with incomes above these respective amounts are able to claim 10% of medical expenses over AUD 5 609.

• 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.

1.1.3. 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	37 000		NIL + 19c for each AUD in excess of AUD 18 200
37 001	90 000		AUD 3 572 + 32.50c for each AUD in excess of AUD 37 000
90 001	180 000		AUD 20 797 + 37c for each AUD in excess of AUD 90 000
180 001 and over			AUD 54 097 + 45c 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 2018-2019 the levy applied at the rate of 2.0% of the taxable income of an individual.

Certain thresholds are applied before the levy is imposed. In 2018-2019, an individual taxpayer was not liable for the levy where their taxable income did not exceed AUD 22 398. 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 37 794. The threshold is increased by AUD 3 471 for each dependent child. Where an individual’s taxable income exceeds AUD 22 398, or a family’s income exceeds AUD 37 794 (plus AUD 3 471 for each dependent child), the levy shades in at a rate of 10% of the excess of taxable income over the threshold, until the levy is equal to 2.0% of the individual’s or family’s taxable income.

For 2018-2019, individual senior Australians of Age Pension age were not liable to pay the levy where their taxable income did not exceed AUD 35 418. Where taxable income exceeded AUD 35 418 but did not exceed AUD 44 273, the levy liability was equal to 10% of the excess of taxable income over AUD 35 418. 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 2018-2019 exceeded AUD 49 304 (plus AUD 3 471 for each dependent child).

Individual taxpayers who had income for surcharge purposes greater than AUD 90 000 in 2018-2019 (or if a couple had a combined income greater than AUD 180 000) but who did not have a complying private health insurance policy, were liable for the Medicare levy surcharge, which is applied as a flat rate on their taxable income. The surcharge rates are 1%, 1.25% and 1.5% depending on the taxpayer’s taxable income above these thresholds. However, affected taxpayers typically purchase a complying policy as the cost of such a policy is generally less than the surcharge. The surcharge is therefore not included in this publication.

1.2. State and local income taxes

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

2. Social security contributions

2.1. Employees’ contributions

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

2.2. 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 2018-2019 the Superannuation Guarantee required employers to pay 9.5% on top of employees’ gross ordinary time earnings to an approved superannuation fund, provided they earn more than AUD 450 per month (they may also choose to make contributions for workers earning less than this threshold). This threshold is not indexed. 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 2018-2019 tax year this threshold was AUD 54 030 per quarter. The Superannuation Guarantee rate will remain at 9.5% until 2020 21, then 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 legislated, 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.

3. Other taxes

3.1. 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 2018-19 was 5.45% for employers with total Australian wages in excess of AUD 850 000. 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 850 000. The exempt amount is reduced based on the proportion of the employer’s New South Wales pay-roll to its total Australian pay-roll.

4. Universal cash transfers

4.1. Transfers related to marital status

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

4.2. Transfers related to dependent children

• Family Tax Benefit (FTB) Part A is paid to a parent, guardian or an approved care organisation to help families meet the costs of raising children. For 2018-2019, the base rate of FTB(A) is payable where the combined ‘adjusted’ taxable income of parents does not exceed AUD 94 316. The payment shades out at the rate of AUD 0.30 per AUD 1 of income over the ceiling. The base rate of payment is AUD 1 529.35 for a dependent child 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 2018-2019 families may receive a maximum payment of AUD 4 766.90 for each child aged under 13 years and AUD 6 201.35 for each child aged 13 to 15 years and for each child aged 16–19 in full time secondary school. For 2018-19 an end of year supplement of AUD 751.90 per child is available for families with a combined taxable income of less than AUD 80 000. For 2018-2019, the higher benefit tapers out at the rate of AUD 0.20 for each dollar of income over AUD 53 728 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. For FTB(A) recipients, an Energy Supplement is payable if the recipient has been continuously eligible for FTB(A) since 19 September 2016. For eligible families, the rate of Energy Supplement is AUD 91.25 for each child under 13 years, AUD 116.80 for each child aged 13 to 15 years and each child aged 16–19 in full time secondary school. The Base rate of energy supplement is AUD 36.50 for each child. The attached calculations assume that the family is eligible for FTB(A) Energy Supplement.

• Family Tax Benefit Part B (FTB(B)) is targeted at single income couple and sole parent families. Eligibility for FTB(B) is contingent upon having a FTB 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. 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 earn AUD 100 000 or less 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 2018-2019, this threshold is AUD 5 621, above which the entitlement is reduced by AUD 0.20 for each dollar of income. There is no secondary earner income test applied to sole parents. For 2018-2019, the maximum payment is AUD 3 197.40 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 4 420.15 if there is a child under 5 years. The attached calculations assume each dependant is between 5 and 12 years of age. For FTB(B) recipients, an Energy Supplement is payable if the recipient has been continuously eligible for FTB(B) since 19 September 2016. For eligible families, the rate of Energy Supplement is AUD 73.00 for each child under 5 years, and AUD 51.10 for each child aged 5 to 12 years.

• 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 2018-2019 is up to AUD 2 199.83 for the first child (and all multiple births) and up to AUD 1 100.55 for subsequent children. This supplement and upfront payment replace the previous Baby Bonus.

• On 1 January 2011 Australia’s first Paid Parental Leave scheme commenced. The scheme provides two government-funded payments: Parental Leave Pay and Dad and Partner Pay. Parental Leave Pay (PLP) provides the primary carer of a child with 18 weeks’ pay at the national minimum wage (AUD 740.60 per week before tax in 2018-2019), 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 an eight week gap between two working days. The primary carer’s adjusted taxable income must be AUD 150 000 or less in the financial year prior to the date of claim or date of birth or adoption, whichever is earlier. PLP and Newborn Supplement cannot be paid for the same child. A person cannot claim FTB(B) or the dependent spouse, child housekeeper and housekeeper tax offsets 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 740.60 per week before tax in 2018-19), 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 an eight week gap between two working days. The father or partner’s adjusted taxable income must be AUD 150 000 or less in the financial year prior to the date of claim or date of birth or adoption, whichever is earlier. DAPP and PLP may be paid for the same child.

• Child Care Subsidy (CCS) replaced the previous Child Care Benefit (CCB) and Child Care Rebate (CCR) from 2 July 2018. CCS is a means-tested payment which assists families with the cost of approved child care. CCS is payable to eligible families with incomes up to AUD 351 248. A percentage of the cost of childcare is subsidised, with the applicable percentage varying from 85% for families with income less than AUD 66 958 to 20% for families with income between AUD 341 248 and AUD 351 248. CCS to families with income above AUD 186 958 are capped at AUD 10 190 per child. The attached calculations assume no child care usage.

• Parenting Payment is a taxable payment payable to low income families. Partnered persons are eligible if they have a qualifying child under six years of age, and sole parents are eligible if they have a a qualifying child under eight years of age. In 2018-2019 the maximum annual amount of Parenting Payment (Partnered) (PP(P)) was AUD 12 934.74. Only one parent in a couple can be entitled to PP(P). The maximum annual amount of Parenting Payment (Single) (PP(S)) was AUD 20 011.42. These payments are subject to income and assets tests. The Parenting Payment (Partnered) tapers out at a rate of AUD 0.50 per AUD 1 of income over AUD 2 704 up to AUD 6 604 and reduces at a rate of AUD 0.60 per AUD 1 for income over AUD 6 604. 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 25 674. If the spouse has little or no income (less than AUD 2 704 per annum), he or she would not receive any Parenting Payment when the higher earning partner’s income exceeds AUD 45 296. PP(S) reduces by AUD 0.40 for each AUD 1 of income above AUD 4 903.60 plus AUD 639.60 for each child other than the first. The attached calculations assume dependants are aged six and seven. A non-taxable Energy Supplement is payable with Parenting Payment. Recipients of PP(P) receive AUD 205.40 annually, and recipients of PP(S) receive AUD 312.

• The Newstart allowance is a taxable payment payable to single persons and partnered individuals who are unemployed or are regarded as unemployed. It is also payable to a member of a couple if their youngest child is aged six years or more and to single parents if their youngest child is aged eight years or more. It is conditional on recipients fulfilling a personal Job Plan, which typically involves taking part in activities such as job seeking and training. In 2018-2019 the Newstart allowance for singles without dependants was AUD 14 327.30 and for partnered individuals was AUD 12 934.74. These payments taper out at a rate of AUD 0.50 per AUD 1 for incomes between AUD 2 704 and AUD 6 604, and reduce at a rate of AUD 0.60 per AUD for incomes over AUD 6 604. The Newstart allowance for partnered individuals reduces by AUD 0.60 for each AUD 1 of their partner’s income above AUD 25 272 (taking into account the Energy Supplement). For single principal carers with dependent child(ren), it reduces at a rate of AUD 0.40 per AUD 1 for incomes over AUD 2 704. A non-taxable Energy Supplement is payable with Newstart allowance. For singles without dependants, Energy Supplement is AUD 228.80 annually, and for partnered individuals is AUD 205.40.

• A non-taxable supplementary payment called Pharmaceutical Allowance (PA) is payable to eligible persons; 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 2018-2019, the payment is AUD 161.20.

• A Telephone Allowance is available on a quarterly basis to eligible individuals, including individuals who receive PP(S) or PA if their PP(S) entitlement is reduced to 0. The basic rate of the Telephone Allowance is AUD 117.78 for 2018-2019, with a higher rate of AUD 174.43 available for recipients of Disability Support Pension who are under the age of 21 and where a home internet service is connected in the individual’s or partner’s name. The attached calculations assume the standard rate is applicable.

4.3. Other transfers

Single Income Family Supplement

• The Single Income Family Supplement (SIFS) is a non-taxable payment for households with one main income earner. This payment has been phased out, with grandfathering commenced 1 July 2017.

• The SIFS phases in at a rate of AUD 0.025 for every AUD 1 above AUD 68 000 until it reaches AUD 300. Once the main earner’s income exceeds AUD 120 000 the SIFS reduces by AUD 0.01 for every AUD 1. If there is a secondary earner, every AUD of their income above AUD 16 000, reduces the SIFS by AUD 0.15.

Income Support Bonus

• The Income Support Bonus ceased as of 31 December 2016.

5. Recent changes in the tax/benefit system

In 2018-19, the following changes to the tax and benefits system commenced:

• The Low and Middle Income Tax Offset was introduced from 1 July 2018.

6. Memorandum items

6.1. Identification of an average worker

The source of the information used in replying to the questionnaire was the Australian Bureau of Statistics publication Average Weekly Earnings — Australia, catalogue number 6302.0. 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 2018-2019 income tax year have been calculated as the average of the two biannual figures (November 2018 and May 2019 (released in August 2019)).

In August 2009 the Australian Bureau of Statistics (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.

6.2. 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.

In 2014-15, around 95 per cent of the employers’ estimated superannuation guarantee obligations were paid to employees.

2019 Parameter values

Average earnings/yr	Ave_earn	87 827
Low Income Tax Offset	low_inc_cr	445
	low_inc_lim	37 000
	low_inc_redn	0.015
Low and Middle Tax Offset	Lmito_cr_low	255
	Lmito_inc_incr	37 000
	Lmito_inc_decr	90 000
	Lmito_up	0.075
	Lmito_dwn	0.03
	Lmito_max	1080
Tax schedule	tax_sch	0.000	18 200
		0.190	37 000
		0.325	90 000
		0.370	180 000
		0.450
Medicare levy	medic_rate	0.02
exemption limits	sing_lim	22 398
married	m_lim	37 794
sing parent receiving PPS	SAPTO_lim	49 304
+ per child	ch_lim	3 471
shading-in rate	shade_rate	0.1
Part A FTB max	FTB_A_max	4 766.9
Part A FTB basic	FTB_A_base	1 529.35
part A income limit 1	FTB_A_lim1	53 728
part A income limit 2	FTB_A_lim2	94 316
reduction rate 1	FTB_A_taper1	0.2
reduction rate 2	FTB_A_taper2	0.3
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	751.90
Part A FTB max end of year supplement threshold	FTB_A_supp_lim	80 000
Part B FTB	FTB_B	3 197.40
part B partner income limit	FTB_B_lim	5 621
reduction rate	FTB_B_taper	0.2
Income limit (primary earner)	FTB_B_lim_p	100 000
Part B FTB ES no child <5 years old	FTB_B_CES_5	51.1
Single Income Family Supplement max rate	SIFS_max	300
Single Income Family Supplement phase-in threshold	SIFS_in_lim_pr	68 000
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	120 000
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	16 000
Single income family supplement phase out taper - secondary earner	SIFS_out_taper_sec	0.15
Parenting payment single	PPS	20 011.42
reduction rate	PPS_taper	0.4
income limit	PPS_lim	4 903.6
additional limit per child	PPS_ch_lim	639.6
Parenting payment single Energy Supplement (ES)	PPS_CES	312
Pharmaceutical allowance	PA	161.2
State pay-roll tax rate (NSW)	Pay_roll_rate	0.0545
Additional parameters
Newstart allowance single rate	NSAS	14 327.3
Newstart allowance single ES	NSAS_CES	228.80
Newstart allowance partnered rate	NSAP	12 934.74
Newstart allowance partnered ES	NSAP_CES	205.40
reduction rate 1	NSA_taper1	0.5
reduction rate 2	NSA_taper2	0.6
income limit 1	NSA_lim1	2 704
income limit 2	NSA_lim2	6 604
Senior Australian and Pensioner Tax Offset	SAPTO	2 230
Senior Australian and Pensioner Tax Offset single threshold	SAPTO_thresh	32 279
Senior Australian and Pensioner Tax Offset taper rate	SAPTO_taper	0.125
Telephone allowance	Tele_A	117.74

2019 Tax Equations

The equations for the Australian system in 2019 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 takes into account 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	P	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_taper2,0),,0)))
	Credits in taxable income of spouse	taxbl_cr_spouse	S	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 credit	low_cr	B	Taper(low_inc_cr,tax_inc,low_inc_lim,low_inc_redn)
	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)
	Low and Middle Income Tax Offset	lmito_cr	B	MAX(0,IF(Tax_Inc<LMITO_Thr1,LMITO_Base,MAX(IF(Tax_Inc<LMITO_Thr2,MIN(LMITO_Max,LMITO_Base+(Tax_Inc-LMITO_Thr1)*LMITO_Taper1),LMITO_Max-(Tax_Inc-LMITO_Thr2)*LMITO_Taper2))))
	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+lmito_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	P	IF(PA>0,((FTB_A_max+FTB_A_CES_max+IF(princ_earn+spouse_earn<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(princ_earn+spouse_earn<FTB_A_supp_lim,FTB_A_supp,0))*Children-Positive((princ_earn+taxbl_cr+spouse_earn+taxbl_cr_spouse)-FTB_A_lim1)*FTB_A_taper1),Positive((FTB_A_base+FTB_A_CES_basic)*Children-Positive((princ_earn+taxbl_cr+spouse_earn+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)
	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)
	Telephone Allowance	TeleA	P	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)
		cash_trans	J	ftbA+ftbB+taxbl_cr_princ+PA+taxbl_cr_spouse+Tele_A +CEA=CES+SKB+SIFS
13.	Employer's State pay-roll tax	tax_empr	B	earn*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 Newstart allowance for spouse versus Parenting payment for spouse and Newstart allowance for principal.