For Tax Purposes: A brief overview on Tax In Australia (2021-22)

A person’s liability to pay tax in Australia is determined by their residence status for taxation purposes and the source of income derived by that individual. Income tax is levied at a progressive rate on an individual’s taxable income for the year.

Taxable income can be earned in a variety of ways including:

• Employment income (such as salary and wages, allowances, bonuses, tips, fringe benefits, lump-sum payments and super contributions);
• Centrelink and other government payments (such as the age pension, disability support pension, Austudy, Abstudy, Jobseeker, Newstart, youth allowance or carer payments); and
• Investment income (including bank interest) and/or business income.

On 11 May 2021, as part of the ‘2021–22 Federal Budget’, the Australian Government announced it would extend the low and middle-income tax offset (LMITO) for the 2021–22 income year.

The threshold changes include:

• increases the low-income tax offset (LITO) from $445 to $700 and adjusts the phase-out rules;
• increases the top threshold of the 19% personal income tax bracket from $37,000 to $45,000; and
• increases the top threshold of the 32.5% personal income tax bracket from $90,000 to $120,000.

Low-income tax offset

The LITO maximum amount has increased from $455 to $700 per year for the 2020–21 income year and future years.

Dual citizens or a resident of another country?

Australia has tax agreements with more than 40 countries. These tax agreements, or treaties, aim to prevent double taxation and promote cooperation between international tax authorities.

Individuals that are legal residents of a treaty country will be subject to the conditions of the treaty. In addition to bilateral tax treaties, there are some other international tax arrangements that relate to specific industries or topics.

Tax rates from 2024–25 income year

The effective date of the final stage of the personal income tax plan remains unchanged.

From the 2024–25 income year, the 32.5% marginal tax rate will reduce to 30%. This means for a resident individual the tax rate on their taxable income will be as follows. Your marginal tax rate is the biggest percentage rate of tax you pay.

Tax is one of the constants in life and carries many regulations and laws that must be abided by. It is vital to seek professional advice from qualified accountants. If you require legal advice in relation to your taxation matters HandO lawyers are here to help. We are now offering online services in both English and Chinese.

Simply book an online consultation with us via this link https://straits-lawyers.square.site/product/online-consultation-/11?cs=true or email us at info@holawyers.com or call at 08 8410 9069 to arrange an appointment.

Straits Lawyers is evolving! With our recent growth and development, we have expanded and are excited to announce the launch of our new name HandO Lawyers. Stand by for the new age of legal representation brought to you by HandO!

Please note that this article does not constitute legal advice nor financial advice and HandO Lawyers will not be legally responsible for any actions you take based on this article.