The Government recently released the Australian tax brackets for the upcoming 2023 financial year. These new tax brackets will affect residents, foreign residents, children, and working holiday makers alike.
Let’s look into the details of these changes and how you can easily lodge your Australian tax return online.
What are the current tax brackets In Australia?
For the 2022-2023 financial year, the tax brackets in Australia for residents are as follows:
Taxable income | Tax on this income |
0 – $18,200 | Nil |
$18,201 – $45,000 | 19 cents for each $1 over $18,200 |
$45,001 – $120,000 | $5,092 plus 32.5 cents for each $1 over $45,000 |
$120,001 – $180,000 | $29,467 plus 37 cents for each $1 over $120,000 |
$180,001 and over | $51,667 plus 45 cents for each $1 over $180,000 |
Please note that the above rates do not include the Medicare levy of 2%.
What are the 2023 - 2024 tax brackets in Australia?
The Australian government has announced the new tax brackets for the 2023/24 financial year, which will come into effect on July 1, 2023. The tax brackets for residents will be as follows:
Taxable income | Tax on this income |
0 – $18,200 | Nil |
$18,201 – $47,000 | 19 cents for each $1 over $18,200 |
$47,001 – $124,000 | $9,080 plus 32.5 cents for each $1 over $47,000 |
$124,001 – $180,000 | $33,550 plus 37 cents for each $1 over $124,000 |
Over $180,000 | $62,550 plus 45 cents for each $1 over $180,000 |
Please note that the above rates do not include the Medicare levy of 2%.
Latest changes to Australian tax brackets for 2023/24
Australian residents
For Australian residents, the tax-free threshold will remain at $18,200, but the top threshold for the 19% tax bracket will increase from $45,000 to $47,000. The threshold for the 32.5% bracket will also increase from $120,000 to $124,000. These changes will provide some relief to taxpayers by increasing the amount they can earn before moving into a higher tax bracket.
Foreign residents
If you are a foreign resident, you will see similar changes, with the tax-free threshold remaining at $18,200. However, the top threshold for the 32.5% tax bracket will increase from $120,000 to $124,000. These changes will help foreign residents who work in Australia by providing some tax relief.
Children
For children, the first $416 of their income will not be taxed, and the next $416 will be taxed at a rate of 66%. Any income above $832 will be taxed at the normal rates for adults. These changes will benefit children who earn income, such as through part-time jobs or investments.
Working holiday makers
If you are a working holiday maker, you will also see changes to your tax rates. The tax-free threshold will remain at $18,200, but the top threshold for the 15% tax bracket will increase from $45,000 to $47,000. The threshold for the 32.5% bracket will also increase from $120,000 to $124,000. These changes will provide some relief to working holiday makers who often have lower incomes.
How to file my personal tax?
To file your personal tax, you will need to use the Australian Taxation Office’s (ATO) online services or work with a registered tax agent like Personal Tax Specialists. You will need to provide information about your income, deductions, and any other relevant financial information. The ATO will then calculate your tax liability and provide you with a notice of assessment. Get started now with our simple 5 step process.
How do I report foreign income in Australia?
If you are an Australian resident for tax purposes and have foreign income, you are required to report it to the Australian Taxation Office (ATO).
Foreign income can include salary or wages earned overseas, rental income from overseas properties, or income from investments made overseas.
To report foreign income, you must include it in your Australian tax return. You will need to provide details of the foreign income, including the type of income, the amount received, and the country it was earned in. You will also need to convert the foreign income into Australian dollars using the applicable exchange rate.
If you have paid foreign tax on the income, you may be eligible for a foreign income tax offset to reduce the amount of tax you need to pay in Australia. You will need to provide details of the foreign tax paid and any documentation to support your claim for the offset.
Australians living abroad
As an Australian expat living abroad, filing your tax return can be confusing. But don’t worry, we’ve got you covered! Whether you’ve temporarily relocated or made a permanent move overseas, if you earn income in Australia, you still need to file a tax return. Luckily, there are a few ways you can do this. Read our blog on how to lodge an Australian tax return from overseas for more information.
Maximise savings no matter your tax bracket
Tax season doesn’t have to be stressful. At Personal Tax Specialists we help you maximise your tax deductions, and lodge your return easily. Our 5-step process is 100% online and a registered tax agent is always available to answer any questions you have.
Get started today and lodge your 2023 tax return now.
