Income tax calculator

Below you will see how much income tax you paid over the fiscal year, as well as your income after taxes.

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Understanding income tax and how this calculator can help you

Every Australian contributes to nation-building by paying tax in various forms. For working Australians, part of their income is paid to the Australian government and is used to make public services available and accessible, particularly in the areas of health, education, defence, social security, and roads and railway maintenance.

Knowing how much tax you have to pay can help you determine how much of your income you can budget for your day-to-day needs and for investing in wealth-building assets like properties.

It is crucial, then, to understand how the income tax system works.

How does the Australian tax office define income?

In understanding what income tax is, and how to accurately use the income tax calculator, you first have to get a grasp of how the Australian Tax Office defines income.

You receive income as a result of two things: working or investing. While it is common to think that income means money, it is not necessarily so — income might be in the form of goods and services as well. However, for the purposes of taxation, income is typically regarded by its monetary value, regardless of its form.

ATO classifies income into three categories: assessable, exempt, and taxable. Income in the assessable income classification can be taxed once you earn enough to exceed the tax-free threshold. Some forms of income that are considered assessable are your salaries, tips, gratuities and any other payment for your services, interest from bank accounts, dividends investment income, bonuses, commissions, pensions, rental income, and allowances.

There are also types of income under the exempt classification — these cannot be taxed and can include government pensions and allowances, education payments, scholarships, bursaries, grants and awards.

Taxable income is the part of your assessable income that you pay tax on. It is the difference between your assessable income and all the deductions you are allowed to claim.

What deductions are allowed?

Australians can claim certain expenses as deductions to reduce the amount of tax charged to their income. These deductions include all work-related expenses (clothing, vehicle, phone and internet, self-education, home-office costs, insurance, union fees, and overtime meals). All the fees you pay for managing your tax affairs can also be claimed as deductions.

You can also claim deductions for the gifts or donations you make to registered charities. Take note, however, that you would not be eligible for deductions if you receive a personal benefit in exchange of your donation.

If you have investments, you can cut your taxable income by claiming any expenses associated with them such as bank fees, interest, and management fees.

Lastly, you can also claim deductions if you make personal contributions to your super fund.

How much is income tax and how is it computed?

Income tax depends on your income bracket. Take note that tax rates might differ every financial year, especially with the implementation of the government's new tax plan.

It is also important to know that for tax purposes, a financial year runs from July 1 to June 30 the following year. The tables below show the tax rates for FY 2017-18 and FY 2018-19:

Resident tax rates FY2018–19

Taxable Income Tax Payable
Up to $18,200 Nil
$18,200 - $37,000 19c for each $1 over $18,200
$37,001 - $90,000 $3,572 plus 32.5c for each $1 over $37,000
$90,001 - $180,000 $20,797 plus 37.5c for each $1 over $90,000
Above $180,001 $54,097 plus 45c for each $1 over $180,000

Resident tax rates FY2017–18

Taxable Income Tax Payable
Up to $18,200 Nil
$18,200 - $37,000 19c for each $1 over $18,200
$37,001 - $90,000 $3,572 plus 32.5c for each $1 over $37,000
$90,001 - $180,000 $20,797 plus 37.5c for each $1 over $90,000
Above $180,001 $54,097 plus 45c for each $1 over $180,000

How does the Income Tax Calculator work?

Your Mortgage's Income Tax Calculator gives you an idea about how much income tax you were charged or will be charged over a certain fiscal year. It also computes how much of your income you can actually take home after taxes.

This tool takes into consideration your employment income as well as your other taxable income. With this, you can go back over the last three years to estimate how much income tax you would have paid in the 2016-2017 or 2017-2018 tax years — handy if you've misplaced any of your receipts or want to double-check previous earnings.

Unlike other tax calculators available online, Your Mortgage's Income Tax Calculator already factors in the Medicare levy payable. This allows the tool to provide you with the estimated amount you would be able to take home after tax and healthcare deductions. It can even provide you with weekly, fortnightly, monthly, and annual income.

What to expect with the new tax scheme?

As part of the FY2018-19 Federal Budget, the government will be rolling out a seven-year personal income tax plan that will provide tax relief for low- and middle-income earners. The income tax calculator can help you understand how these changes will affect you.

From FY2018-19, the government will slash taxes for low- and middle-income earners by as much as $1,080 for single Australians and $2,160 for dual-income families. The offsets will be available for 2018-19, 2019-20, 2020-21 and 2021-22 income years.

Starting FY2022-23, the government will increase the top threshold of the 19% tax bracket from $41,000 to $45,000. It will also increase the low-income tax offset from $645 to $700. By FY2024-25, the government will slash the 32.5% tax rate to 30%.

With these changes, around 13.3 million taxpayers would be able to pay lower taxes permanently in FY 2024-25.

The table below shows the comparison of FY2017-18 tax rates and the planned rates for FY 2024-25

Comparison between FY2017-18 and FY2024-25 tax rates

  Threshold Rate
FY2017-18 Up to $18,200 Nil
$18,200 - $37,000 19%
$37,001 - $87,000 32.5%
$87,001 - $180,000 37%
Above $180,000 45%
FY 2024-25 Up to $18,200 Nil
$18,201 - $45,000 19%
$45,001 - $200,000 30%
Above $200,000 45%

How can homeownership affect your taxes?

As mentioned earlier, there are ways to reduce your income taxes as a homeowner.

For instance, if you work in a dedicated home office, you will be able to deduct some of the costs like mortgage repayments, home insurance, depreciation of office equipment, maintenance fees, phone and internet bills, and utility expenses.

If you have a spare room that you rent out, you will also be eligible to claim some tax deductions. Think of it as having a residential rental property. The difference, however, lies in how much you can claim. In this case, you have to apportion the expenses on a floor-area basis based on the area solely occupied by the renter. Know more about other tax benefits homeowners can claim by reading this guide.

You can also claim deductions if you are in negative gearing. This strategy is especially beneficial for property investors who rent out their properties. Check out our guide to negative gearing if you're looking for a more in-depth explanation.

Ask an expert today about your taxes

Taxes are complicated and there are times that you might need someone with professional experience to help you deal with these matters.

A professional might be able to help you identify deductions you can take advantage of to reduce your taxes. They can also guide you in the process of settling your taxes, making it convenient and easy for you! Do not hesitate to reach out to one of our experts by clicking here.

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