The Tax System in Australia

The "equality at the working place" principle has been embraced in Australia. Everyone has the right to earn his/her income, without being discriminated due to ethnicity, religion, sex or language. Every income, that is earned by working or in any other way, is subject to income tax. The amount of the income tax depends on the visa type, the entry date in Australia and the amount of income. Those who obtain a tax number and start to work in Australia have the right to benefit from "tax-free threshold". This means, a part of the earnings, which is under the threshold, is not supposed to be taxed. In this case, income tax should be paid for the earnings above this threshold. The threshold is 6000AUD/year (500AUD/month) for 2007-2008 tax year. Please note, this amount is valid only for those, who have lived in Australia for the complete tax year. This means on the first year (and only the first year) of settlement in Australia, the tax-free threshold will most probably be lower. This increases the amount of tax that has to be paid.

The amount of the tax-free threshold depends on the number of months the taxpayer has lived in Australia in one tax year. In Australia the tax year starts on July 1st and ends on June 30th. For each month between July 1st and June 30th of the following year, the taxpayer is entitled to earn 500AUD without paying any tax. So a person who enters in Australia in April, enjoys the tax-free threshold of 500AUDx3=1500AUD for April, May and June. Besides, the tax rate increases depending on the amount of income. The table below reflects 2007-2008 tax rates:

Please note that those who do not apply for a tax number pay the maximum amount of tax (45%) from their complete income regardless of the amount.

Unfortunately, the income tax is not the only cut from the wage. The pension insurance (superannuation), that is widely known as "super", costs 9% of the salary and if the employer includes it into the salary, this creates another wage cut. Some employers make offers that consist of salary+super. In such cases, the employer pays the pension insurace.

And the health insurance... How much it costs totally depends on what kind of an insurance the person has. If no private insurance has been issued, then it is still possible to use the free-of-charge health services, the state offers. Medicare cut is either 1% or 1.5% depending on the amount of income.