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PERSONAL INCOME TAX
Income tax on personal income is a progressive income tax. The current tax-freethreshold is AUD6,000 and the highest marginal rate for individuals is 45% (plusmedicare levy).As with many other countries, income taxes are withheld from wages and salaries inAustralia, often resulting in refunds payable to taxpayers. A nine-digit Tax FileNumber must be quoted to employers for employees to have withholdings calculatedusing the various tax brackets. In the absence of this number employers are requiredto withhold tax at the highest marginal rate from the first dollar. Likewise, banks mustalso withhold the highest marginal rate of income tax on interest earned on bankaccounts if the individual does not provide their tax file number to the bank.Corporate and business taxpayers are required to provide their tax file number or "Australian Business Number" to the bank, otherwise the bank will be required towithhold income tax at the highest rate of tax. It is not an offence to fail to provide abank or financial institution with a tax file number or Australian Business Number,however the bank or financial institution will be required to withhold income tax at thehighest marginal rate of income tax.Only the federal government imposes income taxes on individuals, and this is themost significant source of revenue for this level of government. The stategovernments do not impose any income taxes, and have not done so since WorldWar II. Income taxes in Australia are progressively imposed with higher incomeearners paying a higher percentage than lower income earners.Where income is earned in the form of capital gains on prescribed assets, only half of the gain is assessable for Capital Gains Tax (CGT) purposes if it was held for atleast 12 months. If the assets was held for less than 12 months, then it is fullyassessable for CGT purposes. A person's principal place of residence however isexempt from CGT.
 
The sliding scale rates for the 2008-09 Tax year are:0% From 0 to 6,00015% From 6,001 to 34,00030% From 34,001 to 80,00040% From 80,001 to 180,00045% Above 180,000Medicare (National Health Insurance) is charged at a flat 1.5% rate. If you earn morethan 100,000 and do not have private health insurance you are liable for an extra 1%of your taxable income. This extra charge is known as the Medicare Levy Surcharge.The Low Income Tax Offset is an offset applicable in full for those earning up to$30,000. Since the 2007-08 Budget it has been increased $600 to $750. The offsetwill phase out for those earning over $30,000 for every dollar of taxable income over $30,000 thus the threshold ends at $48,750. A side effect of the increase of the LowIncome Offset is the amount income per child that can be diverted to children thoughfamily trusts has also been increased.Individuals are also taxable in their own name, for their share of any partnership or trust profits for the financial year.Tax rates for personal income in Australia divide by resident and non resident rates
Resident Tax Rates
Tax rates 2007-08
Taxable incomeTax on this income
$1 – $6,000Nil$6,001 – $30,00015c for each $1 over $6,000$30,001 – $75,000$3,600 plus 30c for each $1 over $30,000$75,001 – $150,000$17,100 plus 40c for each $1 over $75,000$150,001 and over$47,100 plus 45c for each $1 over $150,000
 
Tax rates 2008-09
Taxable incomeTax on this income
$0 – $6,000Nil$6,001 – $34,00015c for each $1 over $6,000$34,001 – $80,000$4,200 plus 30c for each $1 over $34,000$80,001 – $180,000$18,000 plus 40c for each $1 over $80,000$180,001 and over$58,000 plus 45c for each $1 over $180,000
Non Resident Tax Rates
Tax rates 2007-08
Taxable incomeTax on this income
$0 – $30,00029c for each $1$30,001 – $75,000$8,700 plus 30c for each $1 over $30,000$75,001 – $150,000$22,200 plus 40c for each $1 over $75,000$150,001 and over$52,200 plus 45c for each $1 over $150,000
Tax rates 2008-09
Taxable incomeTax on this income
$0 – $34,00029c for each $1$34,001 – $80,000$9,860 plus 30c for each $1 over $34,000$80,001 – $180,000$23,660 plus 40c for each $1 over $80,000$180,001 and over$63,660 plus 45c for each $1 over $180,000
PERSONAL INCOME TAX REFORM
Tax reform plan which will cut income tax for every Australian taxpayer from 1 July2008.For a family with the principal earner on average weekly earnings and the secondincome earner in part-time work (earning 40 per cent of average earnings) theincome tax cut will be around $30 per week rising to $50 per week in 2010.These tax cuts will deliver a cut of around $20 per week to a person currently onaverage weekly earnings from 1 July 2008 rising to around $35 per week from 1 July2010.These tax cuts are in addition to tax cuts that took effect on 1 July 2007. This plan tocut tax will boost family income and help families deal with cost of living pressures.
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