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Understanding Australian Tax Brackets for 2021 and 2022

Every Australian resident must pay taxes to the government. Income tax is usually implemented on all earning individuals globally, so you need to pay your taxes, whether your income comes from a local Australian company or a foreign one.

Some of the only exceptions are specific to foreign incomes and gains of temporary residents. Still, a non-resident is required to pay taxes only on income from Australian sources. Some types of statutory income may be taxable, including specific capital gains.

Tax Rates for Personal Income in 2021 to 2022

Australian taxes are a little complicated, but the only important thing to know is the personal income tax (PIT) rates in Australia. The Australian government has imposed a Personal Income Tax Plan to be followed in the next seven years. It is designed to offer tax relief to taxpayers in the lower personal income tax rates.

The 2022 financial year, which starts on 1 July 2021 and ends on 30 June 2022, is applicable for this tax plan. The following tax brackets are applied to both income-earning Australian residents from local and foreign sources.

Taxable Income

Tax Amount

$0 to $18,200

No Income Tax

$18,201 to $45,000

19 cents for every $1 over $18,200

$45,001 to $120,000

$5,092 + 32.5 cents for every $1 dollar over $45,000

$120,001 to $180,000

$29,467 + 37 cents for each $1 over $120,000

$180,001 and over

$51,667 + 45 cents for every $1 over $180,000

No further changes were proclaimed for the 2021 budget. Still, the Low and Middle Income Tax Offset is extended for another year, so the financial year 2021 to 2022 will be included.

The 2018 Budget yielded multiple modifications to personal tax rates, which took effect from 1 July 2018 to 1 July 2024. The adjustments increased the rate ceiling to 32.5 per cent for the $87,000 to $90,000 income range.

Later, the 2020 Budget announcement introduced more changes, such as lifting the 19 per cent rate ceiling. That resulted in the previous $37,000 increasing to $45,000. Meanwhile, the 32.5 per cent tax bracket ceiling was raised from $90,000 to $120,000.

The Medicare Levy Surcharge is also applicable in different situations, set on a progressive basis if the taxpayer fails to retain eligible private health insurance cover. The surcharge is at one to five per cent, but it is applied to higher-income taxpayers without health insurance coverage.

Meanwhile, here is the Australian tax brackets for non-residents:

Taxable Income

Tax Amount

$0 to $120,000

32.5 cents for every $1 dollar earned

$120,001 to $180,000

$39,000 + 37 cents for every dollar over $120,000

$180,001 and over

$61,200 + 45 cents for every dollar earned over $180,000

All non-residents need not pay the Medicare levy. Moreover, the figures above do not include any applicable tax offsets for non-resident taxpayers.


Basically, the more you earn, the more tax you have to pay the government. Still, you need to ensure that you are not paying more tax than you are legally entitled to. Knowing these also allows you to plan for the tax before they become a problem to you.

New Wave Accounting provides end-to-end accounting and bookkeeping services that help scale and grow businesses. We are small business accountants on the Gold Coast, working for different industries and creating tailored solutions for multiple clients. We understand how small businesses need reliable accounting and bookkeeping services, and so we’re here to help. Call us at (07) 55041999 to schedule an appointment today!

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