Canstar’s Income Tax Calculator calculates the tax payable on gross wages paid in equal weekly amounts. The rates are obtained from the Australian Taxation Office (ATO). No allowance is made for tax deductions, Medicare or other levies and/or payments.

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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); or from 1 July, 2021, to 30 June, 2022 (FY21/22) – and any tax deductions or tax offsets you can claim during that time.

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 Taxation Office. No allowance is made for tax deductions, Medicare or other levies and/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
over $18,200
$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.

Here are the Australian income tax rates and brackets for the 2021/22 financial year for Australian residents, according to the Australian Taxation Office (ATO). This financial year started on 1 July, 2021.

Total taxable income Tax rate
$0 – $18,200 No tax
$18,201 – $45,000 19c for each $1
over $18,200
$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

The rates in the above tables do not include the Medicare levy of 2%.

Source: ATO, July 2021.

→Related article: Income Tax Brackets and Rates in Australia

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?

A 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.

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 tax file number (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.

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.

What can I do to boost my tax return?

Tax deductions may help to boost your tax return and offset any tax you’ll otherwise have payable to the Australian Taxation Office (ATO). Plus, you might be eligible for tax offsets, such as the Low and Middle Income Tax Offset, known as the ‘Lamington’. 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?

Canstar has an article about tax deadlines. Whether you are an individual taxpayer, small business owner or even a self-managed super fund (SMSF) trustee, you may consider downloading the ATO app. It features a key dates tool. Alternatively, the new Canstar App (powered by Frollo) enables tracking tax-deductible expenses, as do various budgeting and savings apps.

→ Related: Canstar’s guide to 2021 tax deadlines

Where can I find more tax information?

The Australian Taxation Office (ATO) has information for Australians about tax. Thinking about your tax return? As well as our pay calculator, Canstar has a 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:

About the author

Jacqueline Belesky is a Sub Editor at Canstar. She is a senior communications professional with 15 years of experience in journalism, editing and public relations. Jacqui brings international experience as a Global Content Manager for ABB and has held senior editorial roles in Australia with the Queensland Government, UQ and John Wiley & Sons. She started her career as a journalist, writing news and feature articles for The Courier-Mail, The Gold Coast Bulletin and www.news.com.au.

You can read Jacqui’s articles, and follow her on LinkedIn and Twitter. You can connect with Canstar on Facebook, LinkedIn and Instagram, and meet our Canstar Editorial Team.

This page has been reviewed by our Sub Editor Tom Letts as part of our fact-checking process.

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.