COF

I've been looking at some numbers, and it seems in Australia that you can earn up to $80,000 and still only be subject to 21% income tax, whereas in the UK if you earned that you'd be subject to the higher rate of 40%.

The tax rates look so low I'm wondering if I'm missing something, you can earn $37,000 and only be subject to 12.6% tax, while in the UK earning that you'd be at 20%.

So from what I can gather you could be earning £40,000 - 50,000 and still only be paying 21% income tax, whereas in the UK you would be on 40%. At the moment I can only dream of earning 40 grand a year, but it seems amazingly low taxes.

Is Australian tax really that low or am I missing something here? I'm guessing there must be some sort of local tax, but is it any worse than UK council tax?

freebo

The main thing you're missing is that if you simply convert $ to pounds Aus wages tend to be higher than the UK, and also costs. The average wage in here is something like $70k, thats #43.5k at todays ex rate (no pound sign on Oz keyboard).

Straight conversions of prices/wages can be misleading - people here suggest a UK wage x 2.2 gives you the Australian equivalent.

COF

Thanks for that. So if the average Australian earns $70,000 a year, then they're going to be paying something like 15-21% income tax?

Also, if wages are higher, I'm guessing that means the equivalent of earning £40,000 a year in Australia is more like earning $90 - 100,000 in Australia? From what I can see that would make tax rates between 25% and 30%.

So I guess you could say on balance Australian tax rates are somewhat lower than the UK but not massively?

jimbo_d

Yes the total tax take here is less as there's no tax on jobs (national insurance), you've also got to add 7% to UK income tax calculations.

freebo

Isn't the Medicare Levy basically the same thing?

Basic rate of tax at 38% comes in at $80k, which is just above the national average, roughly equivalent to 36k (pounds) UK basic rate comes in at 37.4 @ 40% so not much difference there. Aus higher rate tax starts at $180k

Seneca21

Plus the UK cranked the top rate up to 50% - isn't the Aus top rate 45%?

freebo

UK 50% rate starts at GBP 150K, Aus top rate 45% at AUD 180K, I'm sure a higher percentage of Australians are within the top bracket than English.

Seneca21

Sounds like it.

markbhx

You can earn twice what you do in the UK but everything costs twice the price also. So your really in the same position but better weather :-)

Seneca21

OP should not be misled by this. Many things cost less like water, fuel, council tax, etc., although different regions of Australia vary widely. Some report SE Qld as being quite expensive.

jad n rich

Have you looked at the ATO site, once you earn over $37,000 the rate up to the $80,000 bracket is about 30% not 15 or 21%. Plus medicare levy.

jimbo_d

It's about 2.5% for high rate payers as oposed to 7% NI for everyone

Amazulu

I dunno - all I know is that I pay a lot more tax than I did in the UK.

bcworld

NI is 11% isn't it...if not contracted out?

I reckon for $80k tax + medicare levies is about 25% and on £36500 (using divide by 2.2) tax + NI (11%) is about 27% total deduction.

jad n rich

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But are medicare and NI the same thing?

NI is 11% but thatsNHS and your pension.

Medicare levy is 1.5 or 2.5% but its only for emergency medical care and a % of some medical costs.

Superannuation may be paid by your employer, or it may be from your income if its a 'salary package' , if you are self employed you have to provide your own super. As for the pension it is means tested, everything from your car to artwork and household furniture is an asset