Current Tax Rates in Australia: 2023-2024 Detailed Guide

Current Tax Rates in Australia: 2023-2024 Detailed Guide

11 Jun, 2024 By: Lotus Smart
Current Tax Rates in Australia: 2023-2024 Detailed Guide

To pass through the Australian tax system, both residents and non-residents in Australia have to understand the current rates of tax. This blog goes into detail concerning the income tax rates, Medicare Levy, capital gains tax rates, and the changes made to the tax rate and thresholds for the years 2023-2024. We also cover essential tax deductions and offsets available to taxpayers.

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Overview of the Income Tax Rates

Australia has a progressive income tax system; the more the income, the higher the rate of tax chargeable. It is essential that people be kept up-to-date on the rates of tax in Australia to enable accurate planning and compliance.

Tax Rates for Residents

Resident Tax Rate for 2023-

For the year ending 2023-2024, the brackets for the residents holding up the taxes are:

  • $0 – $18,200: No tax
  • $18,201 – $45,000: 19% of the amount over $18,200
  • $45,001 – $120,000: $5,092 + 32.5% of the amount over $45,000
  • $120,001-$180,000: $29,467 plus 37% of the amount over $120,000
  • $180,001 and over: $51,667 plus 45% of the amount over $180,000

These rates point out the progressiveness of the tax system, with higher earners made to contribute more.

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Current Tax Rates in Australia: 2023-2024 Detailed Guide2024-06-11 at 2.09.27 PM 2

Tax Brackets for Non-Residents

Non-residents are generally taxed at a different rate than residents. Thus, non-resident rates for the financial year 2023-24 are:

  • $0 to $120,000: 32.5%
  • $120,001 – $180,000: 37%
  • $180,001 and more: 45%

This is to ensure that from the first dollar earned, non-residents are in a higher tax bracket than residents.

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Medicare Levy

The Medicare Levy is part and parcel of the funding for Australia’s health expenditure. Overall, the taxpayers contribute 2% of their taxable income as a levy. However, there are reductions and exemptions for low-income taxpayers and specific other categories.

Current Tax Rates in Australia: 2023-2024 Detailed Guide2024-06-11 at 2.09.27 PM 2

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Capital Gains Tax Rates

Capital Gains Tax (CGT) is the proceeds from selling a capital asset. The categorisation for this tax is done on the number of years the asset was being held for:

  • Assets held for less than 12 months: Taxed at the individual’s marginal tax rate.
  • Assets held over 12 months: Entitles residents to a 50% discount on the capital gain and thus reduce the effective tax rate.

Non-residents fall under the bracket of CGT discount hence the timing and length of holding become critical.

Current Tax Rates in Australia: 2023-2024 Detailed Guide2024-06-11 at 2.09.27 PM 2

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Changes in Tax Rates and Thresholds

The rate and threshold reforms correspond to changes in income brackets and, more specifically, Medicare Levy thresholds for the fiscal year 2023-2024. Keep up with these changes to ensure compliance and optimal tax planning.

Current Tax Rates in Australia: 2023-2024 Detailed Guide2024-06-11 at 2.09.27 PM 2

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Tax Offsets and Deductions

That means there are many of what can be termed as tax deductions and offsets that bring relief to the taxpayer by reducing the tax base and the tax that needs to be paid. The most important of these include work expenses, donations, and costs related to investment properties. Offsets, such as the LMITO, reduce tax for those qualified with surpluses that would be carried forward.

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FAQs

Current Tax Rates in Australia: 2023-2024 Detailed Guide2024-06-11 at 2.09.27 PM 2

Q1: What are the current income tax rates in Australia?

Taxable residents are considered to pay 0% on incomes up to $18,200 and 45% over $180,000, while non-residents are taxed at 32.5% up to $120,000, 37% between $120,001 to $180,000, and 45% for the rest.

Q2: What is the difference between tax rates for residents and non-residents?

Residents are entitled to a $18,200 tax-free threshold, while non-residents are not, so their initial rate is usually higher.

Q3: What is the Medicare Levy and how is it calculated?

Medicare Levy is 2% of the taxable income and has several reduction and exemption rules for low-income earners and targeted groups.

Q4: What is the rate for the capital gains tax?

All capital gains on the assets held for 11 months or less are taxed to the individual at the individual’s marginal tax rate. However, on longer assets, residents get a discount of 50% on capital gain.

Q5: What is the altered tax rate and threshold policy for 2023-2024?

Adjustments in updating the income brackets, Medicare Levy thresholds, and specific changes ensure taxpayers are taxed fairly according to their incomes.

Q6: What tax deductions and offsets are available?

The deductions encompass all work-related expenses, charitable donations, and costs related to investment property. Offsets reduce tax payable to other taxpayers in a similar way to LMITO.