Tax Return:: Australian Tax Rates & the Tax Withheld deducted from your Gross Income
Hello, this is P&C Tax Professionals, a specialist in all things related to tax and super!
Do you guys know how your tax withheld amount is being calculated while you're working in Australia?
If not, there's no absolutely no need to worry! Today, I am going to show you how tax is normally deducted from the weekly income we earn.
Do you all remember the Tax File Number Declaration Form we were all required to complete when we initially got hired in Australia? If you are unsure of what the TFN Declaration Form is, please refer to one of our previous blog posts titled "How to prepare Australian Tax File Number (TFN) Declaration Form".
Let me continue my discussion on the assumption that everyone is a resident for tax purposes in Australia.
When you fill out the TFN Declaration form, the tax rate applied to your income varies slightly depending on whether you choose to claim the Tax-Free Threshold or not.
First of all, I will explain further using the Fortnightly tax table as displayed below:
In Australia, most salaries are paid on a fortnightly basis (i.e. every two weeks), so I'll use the Fortnightly Tax Table as the base of my example.
The Australian ATO website also provides a tax table for weekly and monthly income earners, so if your income is paid on a weekly or monthly basis, please access the link below to check the relevant tables.
Weekly tax table link:
Monthly tax table link:
The tax table shown above is the Fortnightly Tax Table. For example, if your fortnightly income amounts to $712 and you have selected 'YES' to the question, 'do you want to claim the tax-free threshold from this payer?' on your TFN Declaration form, then your employer must pay you the full amount of $712 without deducting any taxes. Please take the time to look through the income range outlined within the tax table.
However, if you have selected 'NO' to the above question on your TFN Declaration form, $156 of tax would be withheld or deducted from your gross pay and this net amount will be the amount that will credited to your bank account.
In other words, since tax is withheld on your income, this can later be refunded to you when you lodge your annual tax return.
Now, I'll give you an example using a higher income range.
Now for example, if your fortnightly income is $1,640, please refer to the table above.
1. If you answered 'YES' to the Tax-Free Threshold on your TFN Declaration Form = $232 is tax withheld and you will receive $1,408 as your net pay.
2. If you answered 'NO' to the Tax-Free Threshold on your TFN Declaration Form = $472 is tax withheld and you will receive $1,168 as your net pay.
If you would like to take a look at the Fortnightly Tax Tables in more detail, please refer to the link below: https://www.ato.gov.au/rates/fortnightly-tax-table/
I hope this blog post has given you some useful insights to help you with your understanding of tax rates and withholding tax in Australia.
As always, if you have any further questions or enquiries please do not hesitate to contact us through our Official Facebook Page (P&C Tax Professionals - Australia) or simply direct your questions to our email address at: pnctax@naver.com.
Thank you and bye for now :)
Комментарии