Depending on which tax bracket you fall into, you will owe a different amount.
Working out your taxable gross income can be complicated because not all earnings count towards income in the same way. See how it works with this case study.
Roger does his taxes
Roger was doing his taxes for 2017. His first step was to work out his gross income from all taxable sources. In his case, this was:
|Income||Amount earned (AUD)||Taxable amount|
|Rental income in Australia||$10,000||$10,000|
|Interest earned from an Australian savings account||$400||$400|
|Foreign investment dividends, with a $1,000 total profit||$5,000||$1,000. Capital gains or losses|
|Sale of an investment property at a $10,000 loss||$100,000||$90,000. Capital gains or losses|
|Total||$195,400. Gross income||$181,400. Net income.|
|Interest and repairs on investment property||$2,000||-$2,000|
|After deductions total||$193,400||$178,400|
The amount Roger owes in tax is calculated based on his net income and tax bracket. Looking at a table of taxable income thresholds, he was able to see how his charitable donations and other deductions pushed him into a lower tax bracket.
- With a net income of $181,400, Roger would owe $54,232 in tax, plus another 45c for every dollar over $180,001.
- After applying deductions and considering taxable income, Roger’s net earnings were $178,400, which means he owes $19,822, plus 37c for every dollar over $87,000.
Tax thresholds in Australia
|Taxable income||Tax calculated at|
|Less than $18,200||None|
|$18,201–$37,000||19c per $1 > $18,200|
|$37,001–$87,000||32.5c per $1 > $37,000 plus $3,572|
|$87,001–$180,000||37c per $1 > $87,000 plus $19,822|
|More than $180,001||45c per $1 > $180,000 plus $54,232|