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Income tax rates in Australian for the 2012/2013 year

In July 2011, the federal government announced the introduction of a carbon tax on Australia’s biggest polluting companies. According to the government, more than half of the revenue raised from the carbon tax will be redirected to Australians in the form of tax cuts (for taxpayers) and a Clean Energy Supplement (for Age Pensioners and others). The tax cuts and supplement are designed to compensate Australians for the expected cost increases that will be passed onto consumers when the carbon tax is introduced from July 2012.

In the May 2012 Federal Budget, the Federal government announced further payments to taxpayers in the form of education bonuses, increases in family payments and other payments which are to be funded by not reducing the company tax rate as initially promised.

The tax rates applicable for the 2012/2013 year are set out below. We have included the tax rates for the 2012 year (including the low-income threshold for the Medicare levy announced in the May 2012 Federal budget) at the end of the article, for your reference and convenience.

Note: If you’re Age Pension age or older, you may be eligible for a higher tax-free threshold by taking advantage of the Senior Australians Tax Offset (SATO). Refer to other SuperGuide articles for more information on SATO.

Note: The primary source for taxpayers on any information relating to tax rates is the Australian Taxation Office website (www.ato.gov.au). SuperGuide doesn’t answer questions specifically on the income tax rates.

Income tax rates from 2012/2013 financial year

From the 2012/2013 year, the tax-free threshold jumps to the first $18,200 of your income. You will be able to earn up to $20,542 (from the 2012/2013 year) before any income tax is payable, when taking into account the Low Income Tax Offset (LITO). From the 2012/2013 year, your top tax rate can be expected to be 0%, 19%, 32.5%, 37% or 45% (plus Medicare levy).

Tax scales	2012-2013		2015-2016
	Threshold $	Marginal rate	Threshold $	Marginal rate
1st rate	18,201	19%	19,401	19%
2nd rate	37,001	32.5%	37,001	33%
3rd rate	80,001	37%	80,001	37%
4th rate	180,001	45%	180,001	45%
LITO	Up to $445	1.5% withdrawal rate on income over $37,000	Up to $300	1% withdrawal rate on income over $37,000
Effective tax-free threshold*	20,542		20,979

Source: Adapted from the Office of the Deputy Prime Minister and Treasurer 2011, Joint media release with Prime Minister (No .081) 10 July 2011, ‘Combining tax cuts with significant tax reform’, *Includes the effect of the tax-free threshold and the low income tax offset (LITO)

For the 2011/2012 year, you can expect a tax-free threshold on the first $6000 of your income, and you can earn up to $16,000 (for the 2011/2012 year) without paying income tax when taking into account the Low Income Tax Offset (LITO). For the 2011/2012 year, your top marginal tax rate can be 0%, 15%, 30%, 37% or 45% (plus Medicare levy).

Income tax rates for 2011/2012 financial year
Income	Marginal tax rate	Tax payable
$0-$6,000	0%	Nil
$6,001- $37,000	15%	15 cents for each $1 over $6,000
$37,001-$80,000	30%	$4,650 plus 30 cents for each dollar over $37,000
$80,001-$180,000	37%	$17,550 plus 37 cents for each dollar over $80,000
$180,001 and above	45%	$54,550 plus 45 cents for each dollar over $180,000

Source: Adapted from information on the ATO website (www.ato.gov.au). Maximum LITO payable is $1500 up to taxable income of $16,000.

Note: For the 2011/2012 year only, if your taxable income is more than $50,000 then your income will also be subject to a flood levy. The flood levy is set out in the table below.

Taxable income	Flood levy (for 2011/2012 year) on this income
$0 to $50,000	Nil
$50,001 to $100,000	Half a cent for each $1 over $50,000
Over $100,000	$250 plus 1c for each $1 over $100,000