Tax & Pay Calculator 2021
- What is income tax?
- How is income tax calculated?
- What is the rate of income tax?
- What tax deadlines apply for 2021?
- How much do you have to earn to pay tax?
- What is taxable income?
- How much tax do I need to pay in Australia?
- How do you calculate taxes?
- What is the tax-free threshold in Australia?
- What is a tax return?
- Do I need to do a tax return?
- How do I do a tax return?
- What can I do to potentially boost my tax return before 30 June?
- How much tax will I get back?
- How can I keep track of tax due dates?
- Where can I find more tax information?
What is income tax?
Income tax is a type of tax you pay to the government on income earned from a job or your investments, such as shares and ETFs. Income tax is worked out based on what you earn in a financial year, such as from 1 July, 2020, to 30 June, 2021 (FY20/21) and any tax deductions or tax offsets you can claim.
How is income tax calculated?
Canstar has an income tax calculator that can assist you to calculate your approximate income tax for the current financial year. The income tax calculator calculates the tax payable on gross wages paid in equal weekly amounts. The rates are obtained from the Australian Tax Office. No allowance is made for tax deductions, Medicare or other levies &/or payments.
What is the rate of income tax?
How much tax will you be contributing? For individual taxpayers who are Australian residents for tax purposes, the following rates apply for the 2020/21 financial year.
|Total taxable income||Tax rate|
|$0 – $18,200||No tax|
|$18,201 – $45,000||19c for each $1
|$45,001 – $120,000||$5,092 plus 32.5c
for each $1 over $45,000
|$120,001 – $180,000||$29,467 plus 37c
for each $1 over $120,000
|$180,001 and over||$51,667 plus 45c
for each $1 over $180,000
Source: ATO, October 2020.
→Related article: Income Tax Brackets and Rates in Australia: 2020/2021
What tax deadlines apply in 2021?
Different due dates apply for tax returns in Australia. If you do your own tax return, you need to lodge it with the ATO by 31 October, 2021. If you use a registered tax agent, the ATO says to engage them before 31 October, 2021. You can usually submit after this date, as registered tax agents generally have special lodgement schedules that apply. There are also due dates for paying the ATO if you owe money as part of your individual tax assessment. Generally if you submit on or before lodgement due dates, any tax you owe needs to be paid to the ATO on the later of 21 days after the relevant lodgement date, or when the notice of assessment is received. Tax due dates apply for businesses too, including for business activity statements (BAS) and 2021 fringe benefits tax annual returns.
How much do you have to earn to pay tax?
The ATO advises you will have to pay income tax on every dollar over $18,200 that you earn; earnings below that are tax-free. In addition to the rates in the table above, most taxpayers are also charged a Medicare levy of 2%. You can find out more about the tax-free threshold.
What is taxable income?
Income tax is applied to ‘taxable income’. So: what is your taxable income? The ATO defines taxable income as follows: ‘Your taxable income is the income you have to pay tax on. It is the term used for the amount left after you have deducted all the expenses you are allowed to claim from your assessable income. Assessable income – allowable deductions = taxable income.’
How much tax do I need to pay in Australia?
How much income tax you pay will depend on your personal situation and criteria such as your residency status, taxable income, and the tax rate and bracket that apply to you based on Australian Taxation Office (ATO) requirements. If you are an Australian resident for tax purposes with a tax file number, you may be eligible for a tax-free threshold of $18,200. According to the Australian Government’s Treasury, the largest amounts of income tax in Australia are paid by high income individuals. OECD figures show Australians had a net average tax rate of 23.6% in a recent year, which was slightly lower than the OECD average at the time of 25.9%.
How do you calculate taxes?
Income taxes in Australia are calculated based on your total taxable income and the relevant tax rate that applies to you based on factors such as your residency status. Australia’s progressive tax system means that if you earn more, you’ll usually need to pay more in tax. If you are an Australian resident for tax purposes, you’ll be taxed on your worldwide income (from Australian and overseas) on income that includes salary and wages, tips and gratuities, bonuses, commissions, pensions, rent, overtime payments, work allowances and interest from bank accounts each financial year.
What is the tax-free threshold in Australia?
The tax-free threshold is an amount of money you can earn each financial year without needing to pay tax. According to the Australian Taxation Office (ATO) the tax–free threshold is $18,200. This means if you’re an Australian resident for tax purposes, the first $18,200 of your income each financial year is tax-free and you only pay tax if you earn above this amount.
What is a tax return?
The tax return is an annual reconciliation process. The ATO asks you to report your income and deductions, along with any tax withheld, so it can issue an assessment confirming your calculations are correct, including the application of Australia’s income tax rates. Doing your tax return can help ensure you get a refund if you’ve paid too much tax during the year. Alternatively, it can help you work out if you owe any extra tax to the ATO.
- Read the full story by Ursula Lepporoli, KPMG
Do I need to do a tax return?
Generally, if you’ve met any of these criteria, you need to determine if you may need to lodge an Australian tax return: (1) you have obtained a TFN, (2) you have worked in or for the benefit of Australia, (3) you have received Australian-sourced investment income that is not subject to withholding. Once you’ve met one of these criteria, you must either lodge a tax return or advise the ATO one is not required through a non-lodgment advice form every financial year. You should seek professional tax advice if you are unsure whether you should lodge a return.
- Read the full story by Ursula Lepporoli, KPMG
How do I do a tax return?
There are 3 steps to follow to do a tax return: (1) Choose the process you want to follow, (2) Gather your income and deductions, (3) Submit. You can lodge a tax return electronically, either through your tax agent or in the myTax app. It is possible to lodge a return via paper form; however, this process can take significantly longer. The ATO generally prefers to deliver refunds electronically and will only make payments into Australian bank accounts.
- Read the full story by Ursula Lepporoli, KPMG
What can I do to potentially boost my tax return before 30 June?
Taking simple steps before 30 June might be helpful to maximise your tax refund for this financial year. Canstar’s Editor-at-Large, Effie Zahos, suggests considering these tax-return boosting ideas:
- Getting your paperwork in order
- Prepaying expenses
- Topping up your super
- Buying an asset for your business
- Managing your capital gains and losses
Tax deductions may help to boost your tax return and offset any tax you’ll otherwise have payable to the Australian Taxation Office (ATO). Aside from personal income tax, other taxes can apply in Australia, including various taxes for businesses. More information is available from the ATO. These suggestions are general only, and for specialised tax advice, please consult with an expert.
How much tax will I get back?
You may or may not get money back after completing and lodging your Australian tax return. Your income tax bracket and rate applicable for the financial year, as well as any tax deductions – including those without a receipt plus work-related tax deductions – are considered as part of your tax assessment, and whether or not you are eligible for a tax refund.
Three-quarters of Australians are claiming tax deductions worth $37 billion annually, with an average total deduction of $2,576, despite half of all taxpayers claiming less than $674, according to figures reported by the ABC. Australian Bureau of Statistics data shows $552 billion in total taxation revenue was collected in FY19/20.
How can I keep track of tax due dates?
Whether you are an individual taxpayer, small business owner or even a self-managed super fund (SMSF) trustee, you may also want to consider downloading the ATO app. It features a key dates tool. Alternatively, you could consider the new Canstar App (powered by Frollo) to track your tax-deductible expenses, or another budgeting and savings app. Many popular personal finance apps now include a tax tracking tool for you to identify potential tax deductions against your banking transactions throughout the year.
→ Related: Canstar’s guide to 2021 tax deadlines
Where can I find more tax information?
The Australian Taxation Office (ATO) website has information for Australians about tax. Thinking about your tax return? As well as our pay calculator, Canstar has a new Tax Hub with expert insights and feature articles on topics for this tax time. You can find out about a variety of tax-related topics, such as:
- how to lodge a tax return
- tax deductions
- work-from-home tax deductions
- tax deductions without receipts
- tax deadlines
- private health insurance and tax
- capital gains tax
- investment property tax benefits
- what investing in shares and ETFs may mean for your tax
- second incomes and tax
- the luxury car tax
- transferring a UK pension to your Australian super fund
- Australia’s marginal tax rates
- life insurance premiums and tax
- getting your tax refund each pay day
- CGT when selling a property
- CGT on deceased estate property
- 5 smart ways to spend your tax refund
The information on this page and site is general information only and should not be used as the basis for any tax-related decision making. Please discuss your personal situation with a registered tax agent or other qualified tax adviser.