As the 2023 financial year is coming to an end, it is important to understand the Australian tax rates and how it will impact you financially. In this article, we will explore the marginal tax rates in Australia in 2023 and how it is treated if you are an Australian tax resident or a non-tax resident.
What is the marginal tax rate?
The marginal tax rate is the amount of additional tax for every dollar earned. In Australia, there are currently five tax brackets, with the highest being for individuals who earn over $180,000 per year. The tax rate for this bracket is currently 45%.
It is important to note that tax brackets and rates can change from year to year.
So, what will the tax rates be in Australia in 2023?
The table below shows the tax rates in Australia.
ATO tax rates
|
Taxable income |
Resident tax |
Non tax resident |
|
$0-$18,200 |
Nil |
32.5 for each $1 |
|
$18-201 – $45,000 |
19c for each $1 over $18,200 |
32.5c for each $1 |
|
$45,000 -$120,000 |
$5,092 plus 32.5c for each $1 over $45,000 |
32.5c for each $1 |
|
$120,001 - $180,000 |
$29,467 plus 37c for each $1 over $120,000 |
$39,000 plus 37c for each $1 over $120,000 |
|
$180,000 and over |
$51,667 plus 45c for each $1 over $180,000 |
$61,200 plus 45c for each $1 over $180,000 |
It is important to understand that the highest tax rate for both resident and non-tax residents is 45%.
So, how does this information impact you? If you are an individual who earns over $180,000 per year, you will continue to be subject to the highest tax rate of 45% in 2023. If you are a non-tax resident you are paying $10,000 more compared to a tax resident on the highest tax scale.
Therefore, it is need to undertake proper tax planning before end of financial year to lower your tax rate.
Also below is a summary of tax differences between an Australian tax and non-tax resident.
|
Resident for tax purposes |
Non resident for tax purposes |
|
Lower tax. Tax free threshold |
Higher tax. No tax-free threshold |
|
Tax on worldwide income |
Only taxed on Australian sourced income (most commonly Aust real property) |
|
Pay Medicare levy |
No Medicare levy |
|
Interest income assessed at taxpayer’s marginal tax rate |
Interest taxed at flat 10%, or 45% if no overseas address (or TFN) provided |
|
Liable for CGT on worldwide assets |
CGT only on “taxable Australian property” (most commonly Aust real property) |
One resource that can be helpful in navigating tax laws and regulations is Max Accountants. Max Accountants is a professional accounting firm based in Australia that offers a range of services, including tax advice and compliance. Their team of experts can help individuals and businesses understand their tax obligations and maximize their financial position.
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