About Income Tax in OZ
 

Does the Company in Australia pay their employees after-tax salary each month? or do they pay the before-tax salary to their employee and then the employees will have to lodge the annual income tax return and then pay the annual income tax.

My company offer me after tax monthly pay directly.. Not sure how they calculate my income tax by month, how do they know my income tax deduction?

Re: About Income Tax in OZ
 

Tax is deducted by your employer before you get it. However at the end of the tax year there may have been things that you have paid for which can be credited against the tax you have paid so you complete a tax return and the tax man balances out whether you have paid too much or not enough (you may have income earning investments for example)

Re: About Income Tax in OZ
 

Called "Pay as you go" (PAYG) tax witholding

A general calculation is done by your company on your pay that month/week as if they are the earnings you are going to earn for the whole year. This also leads to some over/underpayments during the year especially if you have vastly different payments each period. So as Quoll says this gets sorted out at end of year from your Tax return of total earnings/deductions. Nearly everyone has to fill one out in Aus.

UK uses PAYE - Pay as you earn - which calculates earnings as a year to date calculation which usually means no tax return each year if you only earn income from a single employer.

This is a rather simplistic explanation I know, I write software for payroll calculations so a bit of a nerd on the subject

Re: About Income Tax in OZ
 

Hi,

I have only just found out I have a job offer in melbourne and I am trying to work out my take home salary if I am on $75k, is anyone able to help me on this?

thanks

Re: About Income Tax in OZ
 

There is a tax calculator here:

http://www.ato.gov.au/individuals/co...14&mfp=001/002

You need to see if that figure includes Super, or is that extra.

Re: About Income Tax in OZ
 

Hi Wendy,

Super is extra but to be completly honest I don't know if having super as extra is better than it being included? At this stage I don't even know what super is.... Still trying to understand it all.

Re: About Income Tax in OZ
 

$75,000 Gross Annual Income
$16,050 Tax
$1,125 Medicare
$57,825 Net


$1,442 Gross Weekly
$309 Tax
$22 Medicare
$1,112 Net

Re: About Income Tax in OZ
 

You want super extra so you would be paid $75k less tax and then a SEPARATE payment at 7% or whatever it is would be paid by your employer to your superannuation fund.

If super is included then they would take 7% off your 75K, pay it to your superannunation fund and then you would pay tax on the remainder. Basically your pre-tax pay would drop.

Re: About Income Tax in OZ
 

a Few more questinos:

1) Is the super (employee contribution and employer contribution) taxable?

2) what the medical levy and medical levy surcharge? they are in the tax calculation form.

3) Is super employeee contribution compulsory?

4) If my salary is A and my employee contribution is B and my company contribution is C, then what is the annual taxable income, it is A-B or A-C?

5) seems it doesnot matter what i input in the tax calculation under "
Reportable super contributions (Reportable employer supernannuation contributions + Deductible personal superannuation contributions)
" It dose not impact the calculation?

Re: About Income Tax in OZ
 

Info on Super here: http://ato.gov.au/individuals/pathwa...001/002/064But basically, your employer has to pay super for you by law, and they have to pay at least 9% of your salary. If you salary sacrifice some of your pay to be put into a super fund, then you won't have to pay tax on that income. The above link expains it in more depth (don't have a lot of time as I am at work)Medicare levy is 1.5% of your salary and everyone has to pay that - it's a bit like National Insurance in the UK. The surcharge is only applicable to you if you earn more than the following (sorry can only find last years) and don't have a private a health fund:The thresholds for the 2009–10 income year are:$73,000 if you are a single person with no dependent children $146,000 if you are part of one of the following: a family (including a couple) with or without dependent children a single parent family.More info on Medicare here: http://www.ato.gov.au/individuals/pa...#001_002_030If you have dependant kids, earn under a certain amount and are on a PR visa you may also be entitled to some Family Assistance - but that's a whole new question lol

Re: About Income Tax in OZ
 

Sorry, it's set out like that - I can't change it as the editor thing won't switch on my work PC (they have IE v 6 billion BC on here!)

Re: About Income Tax in OZ
 

a Few more questinos:

1) Is the super (employee contribution and employer contribution) taxable?
There is a SGC - superannuation Guarantee Contribution from the employer of currently 9% which is not taxed - your own contributions may not be taxed either up to limits called concessional caps http://www.futuretax.gov.au/document...below_500K.pdf employers sometimes offer more than the 9% but this is a minium
2) what the medical levy and medical levy surcharge? they are in the tax calculation form.
Medicare levy is a compulsory deduction taken off at the same time as witholding tax 1.5% on taxable income - therefore when you see tax rate tables and they state Aus max tax is 45 - think about it as 46.5%
Medicare levy surcharge is an additional amount of 1% payable on all taxable income. The surcharge is payable after certain total income levels if you have not purchased private medical funding to a specific level.
http://www.ato.gov.au/individuals/co...t/00216873.htm
There are different arguments as to whether to get private medical or pay the surcharge - personal financial choice.

3) Is super employeee contribution compulsory? No

4) If my salary is A and my employee contribution is B and my company contribution is C, then what is the annual taxable income, it is A-B or A-C? you need to state your starting point A more clearly. If you have been given a package that includes employer super than you need to deduct this before calculation of tax. If starting point A does not include employee super then obviously you do not deduct this before calculation of tax. If you do decide to make employee contributions that are non taxable then these will be deducted before calculation of tax

5) seems it doesnot matter what i input in the tax calculation under "
Reportable super contributions (Reportable employer supernannuation contributions + Deductible personal superannuation contributions)
" It dose not impact the calculation?[/QUOTE] Not sure what calculator you are using but as explained above super contributions will possibly not be taxable so you are only reporting these. Payment summaries from employers at the end of the year report taxable income which will have had all non taxable eg super contributions already deducted

Again I have kept this a bit simple; if you are looking to maximise super contributions and other super opportunities I suggest you talk to a financial advisor

This link may help as well http://www.ato.gov.au/individuals/co...t/00106372.htm

Re: About Income Tax in OZ
 

Thanks for your reply.
Now the situation is i am in OZ. But my wife and child are not in OZ. My wife is working in another country. If her salary is also added, then our income is more than 146,000. In this case, does it mean i need to pay the surcharge? or i can choose not to disclose my wife's salary. (myself, wife and child are all PR)

Re: About Income Tax in OZ
 

God NO! If she is paying tax in another country then its got nothing to do with Oz.

And to simplify your question about tax. 33% will always go in tax. It doesn't matter what they call it. They can call it medicare, or ambulance tax, or federal tax or state tax.

I've worked all over europe and the US and now Oz, and the maths is always the same. Subtract a third from your gross pay. I don't care how they phrase it.

JTL

Re: About Income Tax in OZ
 

I really don't know. You would need to speak with a tax accountant who specialises in that kind of thing.:)

Re: About Income Tax in OZ
 

I agree. The tax residency question comes into this.

Re: About Income Tax in OZ
 

In Oz, including all those things, I have almost always paid around 26% of gross?

Re: About Income Tax in OZ
 

You are possibly in a lower overall tax bracket which means the initial non taxable income reduces the overall tax impact

Re: About Income Tax in OZ
 

No, it's not that. Though I don't think they were just talking exclusively about really high incomes re the 33%...do you get 33% as well when you divide your tax into your gross salary?

Re: About Income Tax in OZ
 

Couple of points:

Super contributions are taxed at 15%, but this is done direct to the Government by the super company - as far as your personal income tax is concerned they are tax-free. But this only applies up to a set limit which varies with age: over 55 you can put more in tax-free and yet more again at 60+. Any contributions over that limit have to be made out of income which has been taxed. The current concessional limit for under 50's is $25,000.

So if you are earning $75,000 exclusive of the employer contribution, his contribution at 9% will be $6,750. That leaves $18,250 which you can put in yourself, and that will be taxed on entry at 15%. If you don't contribute it to super you will pay 30% tax on it. So if you can afford to save $18,250 a year from gross income you will pay $2,737 less tax on it.

As far as your wife's overseas earnings are concerned, if she is paying tax on her income in the country of origin she will, in most cases, be able to bring the net income back to Australia tax-free. If however she is working in a country where she does not have to pay tax (i.e. Saudi Arabia and other middle east countries) then unless she is working as part of a project approved by Austrade she will have to pay Australian tax on any money she brings back.

Disclaimer: I am not a financial or tax advisor, so don't rely on anything I say without checking it!

Re: About Income Tax in OZ
 

The average 33.3% of taxable gross is a rule of thumb - really high tax earners in Aus eg $1M taxable gross are going to be paying around 42%.

A tax earner of $80K taxable is just under 20% tax

Sorry I am not sure I understand the question your gross salary could also contain non taxable items which would skew the result.

Re: About Income Tax in OZ
 

Mine is 0% :thumbup:

And yes, I do have some income :lol:

Re: About Income Tax in OZ
 

Rules of thumb usually cover the average or usual situation....33 just seemed too high to be the rule of thumb for australia from my experience. Have to be earning $220,000 before paying that much.

Re: About Income Tax in OZ
 

Does Transport allowance counted in the taxable income? My company offer annual transport allowance on top of the base salary.

Re: About Income Tax in OZ
 

It gets added to taxable salary, but most people then claim it as a deduction, bringing the taxable salary back down again :thumbup:

Obviously this only applies if yours is allowable as a tax deduction.

Re: About Income Tax in OZ
 

how to determine whether my transport allowance is allowable to be as a tax deduction?

Annual Transport Allowance is included in the taxible income?
 

Annual Transport Allowance is included in the taxible income?

Re: Annual Transport Allowance is included in the taxible income?
 

Yes, and again, for the relevant amount, in the deductions section.

Re: About Income Tax in OZ
 

I've merged your threads together as it makes them easier to follow and answer.