Income Tax Basics for Australians

How Australia’s Tax System Works

Australia has a progressive tax system. This means you pay a higher percentage of tax as you earn more.

Tax Brackets (2024-25)

• $0 - $18,200: Tax-free threshold (no tax)
• $18,201 - $45,000: 19% tax
• $45,001 - $120,000: 32.5% tax
• $120,001 - $180,000: 37% tax
• $180,001+: 45% tax

Everyone also pays the Medicare Levy (2%) for healthcare.

What Counts as Income?

• Salary and wages from employment
• Business income (if self-employed)
• Investment income (interest, dividends)
• Rental income
• Superannuation contributions

What Can You Claim as a Deduction?

You can deduct work-related expenses. These must be:

• Directly connected to your work
• Not private or personal
• Not reimbursed by someone else

Common deductions:

• Professional fees and memberships
• Uniforms and protective gear
• Work-related travel
• Home office expenses (if applicable)
• Tools and equipment

How to Keep Records

• Keep receipts for 5 years
• Divide expenses by category
• Track dates and amounts
• Only claim what you can prove

How to Lodge Your Tax Return

• Lodge online through the ATO website (mygov.au)
• Use a registered tax agent
• Must lodge by 31 October each year

When to Get Professional Help

If you have complex income, large deductions, or run a business, consult a registered tax agent or accountant.