There are exceptions to these categories. For instance,
payments to Defence Force Reserves, which are similar to salaries, are not
taxable. Neither are a number of allowances, such as living-away-from-home
allowance and several defence force allowances. Some government pensions and
allowances are taxable, while others are not. For example, Newstart Allowance
and the Age Pension are taxable, but Disability Support Pension and Parenting
Payment are not. Money received through gifts, gambling winnings (unless the
taxpayer is carrying on a business of betting), inheritances, academic
scholarships and life insurance proceeds are not taxable.[13]
Benefits from some superannuation sources are untaxed for those retirees aged
over 60.
In addition, some benefits provided to employees are not considered
income by the employee for tax purposes, but are taxed in the hands of the
employer. However, some of these fringe benefits may be included as income for
other purposes, such as calculating the Medicare levy surcharge, Higher
Education Loan Program repayments and determining eligibility for some offsets.
For example, superannuation contributions paid through salary sacrifice
arrangements are included for these purposes.
As can be seen from the formula above, deductions reduce the
income on which tax is calculated. They are generally related to the costs of
earning income, such as work-related expenses, interest and dividend
deductions, the costs of operating a business, and the costs of operating a
rental property. In addition, the cost of managing tax affairs is deductable
from income. There are also a small number of deductions that are designed to
encourage particular behaviours, such as for gifts and donations, and personal
contributions to superannuation.
Because they reduce the amount of income on which tax is calculated
deductions are of greater benefit to those on high incomes. For example, a
donation to charity of $100 by someone whose income is over $180,000 in the
2014-15 year results in them paying $49 less in tax and Medicare levy, and
hence the effective reduction in disposable income is $51.[16]
However, for an individual with an income of $20,000 (whose marginal tax rate
including the Medicare levy is 21%) the same donation would result in a
reduction in disposable income of $79, while for someone with an income less
than $18,200 (the tax-free threshold) the full $100 comes from their disposable
income because they would not have otherwise paid any tax on this amount.
Offsets directly reduce the amount of tax payable, and are
provided to cover a diverse range of circumstances. Some, such as the low
income tax offset, the senior Australians tax offset and the pensioner tax
offset are designed to remove most low income individuals from paying any tax.
Others provide subsidies to taxpayers in particular circumstances, such as
those working in remote localities, or who have received termination payments,
while there are several offsets relating to dependents who meet specific
limited criteria. The medical expenses tax offset provides some recompense for
taxpayers with high medical expenses in certain circumstances.
Offsets (otherwise known as rebates or tax credits) provide
the same benefit across taxable incomes. This means someone on the highest
marginal tax rate receives the same zone tax offset as someone on the lowest
marginal tax rate living in the same location. However many offsets, including
the zone offset, are not refundable, and hence are of no benefit to those who
not liable to pay tax.
In some years a levy is applied in addition to the above
calculation. For example, for the 2011–12 tax year a flood levy was imposed at
the rate of 0.5% of income from $50,001 to $100,000, and then $250 plus 1.0% of
income above $100,001. For 2014–15 a temporary budget repair levy of 2.0%
applies to incomes over $180,000.
Australian individual tax rates are progressive, with higher
marginal rates at higher levels of taxable income, and there is a tax-free
threshold below which no tax is payable in most circumstances. The tax rates for
the 2011–12 income year are set out in Table 1 below. These rates do not
include the Medicare levy (which was 1.5% for 2011–12), the Medicare levy
surcharge (payable by high income earners who do not have private health
insurance) or the temporary flood levy.
However, the operation of a number of tax offsets meant that
the effective tax free threshold for most taxpayers was considerably higher at
$16,000.[18]
This data is not publicly available at the unit record
level, and hence it is not possible to analyse the tax behaviour of
individuals, or to consider the tax arrangements of households (for example, to
consider the extent of income-splitting). However, it does provide data grouped
by income up to very high levels, with the highest income category being those
with incomes over $1 million, which is not available elsewhere. For
example, the 2011 Census data groups together all those with incomes of over
$104,000, and due to the small proportion of people with incomes at these
higher levels, data is generally not available from sample surveys as the
sample sizes are insufficient for analysis. The distribution by taxable income
of the data from these returns is shown in Figure 3 below.
The data used in this analysis is grouped according to both
taxable income ranges and ‘total’ income ranges (as recorded on the tax return—that
is, prior to applying specified deductions). For most taxpayers taxable income
is slightly lower than ‘total’ income because they are able to claim some
deductions. In some cases these reductions are very significant—for example,
some 75 tax filers had a ‘total’ income of over $1 million in the 2011–12
year, but a taxable income of less than $6,000.[21]
In addition, as can be seen in Figure 3, there are spikes in taxable income
figures just below each of the marginal tax rate cutoffs. Therefore, in an
attempt to better reflect the actual income distribution, the analysis below generally
uses ‘total’ income groupings.
The disadvantage of using this data is that it
is only possible to analyse averages rather than look at individuals’ patterns
of behaviour. In particular, for very high income groups the number of tax
payers in these categories is relatively small, and hence the average may be
unduly affected by the data from one or two individuals. In addition, the
number of tax filers in each category is rounded to the nearest five for
privacy reasons, which may affect the averages for small numbers. However,
average rates do provide at least some indication of the extent to which
particular deductions or offsets benefit certain income groups.
It should also be noted that this analysis
is based on the tax rules that applied in 2011–12. The tax regime is regularly
amended, and in particular there were major changes in 2012–13 to the tax free
threshold, which was increased from $6,000 to $18,200. Therefore some of the
findings in this analysis may no longer apply.
The ‘total’ income reported in the ATO tables may be
considerably less than the actual income received for some tax filers. This is
because in calculating the ‘total’ income reported from tax returns some
deductions have already been applied. In particular, ‘total’ income includes
net rent, which is gross rent minus interest, capital and other rental deductions.
While the gross income from rent across all tax filers in 2011–12 was some $34.0 billion,
the net rent represented a loss of some $7.9 billion, and it is this
latter amount which is used in deriving the ATO ‘total’ income figure.[23]
Similarly the ATO ‘total’ figure only includes net capital gains, which are
generally the current year’s capital gains minus carryover losses and then with
a 50% discount applied. For 2011–12, total current year capital gains were $24.1 billion,
while the net capital gain was only $9.2 billion.
Therefore, for the purposes of this analysis an additional
concept of gross income is used to attempt to estimate the actual income
received in an income year. It is calculated as the total income as provided in
the tax return but without rent deductions, partnership and trust deductions,
deferred non-commercial losses, tax losses from earlier income years and using
current year capital gains instead of net capital gains.
Table 2 below shows the number of tax filers in each total
income group, the proportion of filers in each group, and the comparative
taxable, total and gross incomes for each group.
|
Total income range
|
Number of individuals
|
% by total income range
|
Taxable income
$
|
ATO total income or loss
$
|
Gross income
$
|
|
Less than $0
|
129,770
|
1.02
|
42,788
|
-2,487,918,396
|
410,351,179
|
|
$0
|
47,510
|
0.37
|
3,362
|
0
|
-62,827,359
|
|
$1 to $6,000
|
741,680
|
5.82
|
1,807,515,688
|
1,926,326,963
|
2,758,567,667
|
|
$6,001 to $10,000
|
452,020
|
3.55
|
3,470,849,468
|
3,633,585,548
|
4,335,031,476
|
|
$10,001 to $15,000
|
706,560
|
5.55
|
8,589,078,580
|
8,898,272,103
|
9,919,272,482
|
|
$15,001 to $20,000
|
838,225
|
6.58
|
14,128,548,014
|
14,660,073,785
|
16,002,244,823
|
|
$20,001 to $25,000
|
781,285
|
6.13
|
16,777,088,987
|
17,553,324,345
|
18,917,996,801
|
|
$25,001 to $30,000
|
757,335
|
5.95
|
19,896,781,233
|
20,827,016,636
|
22,288,126,517
|
|
$30,001 to $37,000
|
1,093,980
|
8.59
|
35,129,429,804
|
36,711,896,629
|
39,081,124,959
|
|
$37,001 to $40,000
|
492,535
|
3.87
|
18,163,345,530
|
18,952,913,008
|
20,067,975,868
|
|
$40,001 to $45,000
|
765,275
|
6.01
|
31,075,923,812
|
32,492,877,200
|
34,320,717,864
|
|
$45,001 to $50,000
|
692,515
|
5.44
|
31,389,961,887
|
32,859,468,924
|
34,660,936,376
|
|
$50,001 to $55,000
|
615,840
|
4.84
|
30,805,440,277
|
32,293,968,495
|
34,091,840,222
|
|
$55,001 to $60,000
|
547,435
|
4.30
|
29,987,818,855
|
31,455,378,134
|
33,229,001,549
|
|
$60,001 to $70,000
|
927,260
|
7.28
|
57,196,770,069
|
60,078,087,772
|
63,552,724,941
|
|
$70,001 to $80,000
|
742,625
|
5.83
|
52,968,283,478
|
55,626,250,107
|
58,929,398,306
|
|
$80,001 to $90,000
|
591,670
|
4.65
|
47,547,889,317
|
50,063,579,368
|
53,006,791,273
|
|
$90,001 to $100,000
|
398,215
|
3.13
|
35,732,169,446
|
37,718,705,799
|
39,986,462,965
|
|
$100,001 to $150,000
|
885,485
|
6.95
|
100,135,326,294
|
105,819,623,043
|
112,621,088,496
|
|
$150,001 to $180,000
|
276,225
|
2.17
|
44,992,640,419
|
47,287,003,166
|
50,440,972,182
|
|
$180,001 to $250,000
|
101,475
|
0.80
|
21,242,105,895
|
22,479,731,777
|
24,003,504,278
|
|
$250,001 to $500,000
|
115,450
|
0.91
|
36,217,503,466
|
38,145,980,285
|
40,403,961,093
|
|
$500,001 to $1,000,000
|
26,355
|
0.21
|
16,801,238,949
|
17,635,997,109
|
18,475,318,514
|
|
$1,000,001 or more
|
9,200
|
0.07
|
18,171,489,554
|
19,248,454,304
|
20,958,751,651
|
|
Other
|
105
|
0.00
|
5,207,840
|
66,187,800
|
72,091,351
|
|
Total
|
12,736,030
|
100.00
|
672,232,453,012
|
703,946,783,904
|
752,471,425,474
|
Source: Parliamentary Library
derived from ATO.
The analysis below largely excludes those with reported
total incomes of $0 or less, as these tax filers do not require the use of
deductions and offsets to reduce their tax liability, and hence their reporting
of them may not accurately reflect their circumstances.
Figure 4 below shows the proportion of gross income from
major income sources by the ATO ‘total’ income grouping. Salary and wages formed
the bulk of income for most taxpayers except at the lower and upper ranges. For
low income groups pensions and allowances were also a significant source of
income, reflecting the targeted nature of most social security payments.
However, gross rent and investment income also formed a significant proportion
of income for this group on average, although it must be remembered that the
income for many of these taxpayers was quite low. It is also interesting to
note that while Australian Government pensions and allowances formed only a
small proportion of the income of those with incomes over $100,000, they
received a total of some $34.7 million in these payments. Note that Family
Tax Benefit payments were not included in this amount, as they are not taxable.
To the extent that income-splitting was being used to reduce
the tax liability of high income earners, it would be expected that this be
through the use of partnerships and trusts, or business income. For example,
the ATO has expressed concern about the use of partnerships by small law firms
for income-splitting purposes.[24]
However, while there were small peaks in the average level of income from
partnerships and trusts for those with incomes in the range $30,001 to $37,000
and $80,001 to $90,000 (both around the thresholds for marginal tax increases)
these are not significant. There was no noticeable peak around the average
income from business at these income levels, rather there was a steady increase
across the income ranges, which tends to suggest there was no particular tax
advantage being sought.
For those with incomes over $1 million, wages and salaries
formed less than 20% of income on average. Other major sources included capital
gains, distributions from partnerships and trusts, and interest and dividend
income.
Figure 4: income sources as a proportion of gross income
by income group, 2011–12
Source: Parliamentary
Library derived from ATO data.
This analysis is limited to deductions listed in the
individual tax return, that is, business-related items are not considered as
they are not identified in this data source. Table 3 lists the major deductions
that are identified in this data, and the total amount for each that was
claimed in the 2011–12 income year.
Table 3: value of major deductions in individual income
tax data, 2011–12
|
Item
|
$ billion
|
Rent deductions
– Interest
– Capital works
– Other deductions
Total
|
24.2
2.2
15.5
41.9
|
Work related expenses
– Car
– Travel
– Uniform/clothing
– Self education
– Other
Total
|
7.8
2.0
1.7
1.1
6.8
19.4
|
|
Personal superannuation contributions
|
4.4
|
|
Partnerships and trust deductions
|
2.4
|
|
Cost of managing tax affairs
|
2.3
|
|
Gifts and donations
|
2.2
|
|
Dividend deductions
|
1.4
|
|
Interest deductions
|
1.1
|
Source: ATO, Taxation statistics 2011–12.[25]
The value of these deductions claimed by tax
filers increased substantially as total income increased. For example, the
total average value of deductions claimed by those with incomes between $25,001
and $30,000 was just over $3,000, while for those with incomes over
$1 million the value of these deductions was over $155,000 (see Figure 5
below).
Figure 5: average deductions by income group, 2011–12
Source: Parliamentary Library
derived from ATO.
While there was a general increase in the
level of deductions claimed as income rose, there was considerable variation in
the patterns across different deductions:
-
rent deductions were the largest deductions claimed across the
entire income range, on average ranging from around $1,500 for those with
incomes between $6,001 and $25,000, rising steadily to $5,000 for those in the
$90,001 to $100,000 range and then to nearly $40,000 for those with incomes
over $1 million. However as a proportion of gross rent income, there was less
difference, with all income ranges reporting a net loss on rental income
(therefore reducing the tax payable on their income from other sources—that is,
negatively geared). The highest proportional losses were experienced by those
with incomes (net of the rental loss) between $55,001 and $80,000, where deductions
exceeded rental income by more than 28%
-
work related expenses were the second highest deduction on
average for all income groups up to $180,000, but the variation in amounts was
much lower, rising from just under $1,000 for those in the $30,001 to $37,000
range to a maximum of just under $4,000 for those in the $250,001 to $500,000
range. Within this category, there was very little difference across income
levels of the average deductions for clothing or self-education
-
personal superannuation contribution deductions increased on
average with income, perhaps not surprisingly. Those with incomes less than
$37,000 claimed on average less than $50, while an average of more than $9,000
was claimed by those with incomes over $1 million
-
deductions relating to partnerships and trusts also increased
steadily on average across the income ranges, largely reflecting increased earnings
from these sources. As a proportion of income from these sources, deductions actually
declined across the income range from over 18% for those with total incomes in
the $6,001 to $10,000 range to less than 3% for those with incomes over
$1 million
-
the average deduction for the cost of managing tax affairs was
between $50 and $100 for all those with incomes less than $25,000. It then
increased steadily reaching just over $200 for those with incomes in the range
$80,001 to $90,000, before climbing to nearly $2,800 for those with incomes
between $500,001 and $1 million. For those with incomes over
$1 million the average jumped to more than $18,000. However this was
largely driven by an average among those who claimed this deduction of some
$1.4 million for some 40 tax filers with total incomes over
$1 million who had taxable incomes less than $6,000. By contrast, those in
the over $1 million income group claiming the deduction, who also had
taxable incomes over $1 million (the major proportion), claimed an average
of $10,000. This deduction includes the fees paid to tax advisers, the cost of
travelling to receive that advice, and the cost of appeals relating to tax
affairs. Possibly the average claim by those with a low taxable income reflects
the high cost of some legal proceedings
-
gifts and donations was the second highest average deduction
(behind rental deductions) for those with incomes over $1 million, with an
average deduction of just under $40,000. This was significantly higher than the
level for those in the income range $500,001 to $1 million, who deducted
on average just under $4,500. For incomes below this level the amount deducted
declines steadily to less than $200 for those in the $80,001 to $90,000 level
and then to under $50 for those with incomes less than $20,000
-
like the deductions relating to partnerships and trusts, the
increase in average dividend deductions across the income ranges is explained
by the increasing income obtained through this source and as a proportion of
the dividend income earned generally varies between 6% and 9%. As this
deduction includes the interest on money borrowed to purchase shares and
similar investments, this suggests that negative gearing of share purchases is
not as frequently used as negative gearing of rental properties
-
on the other hand, deductions related to earning interest income as
a proportion of income received from interest increased substantially as total
income rose, climbing from around 2% for those with incomes less than $40,000
to 9.3% for those with incomes between $100,001 to $150,000 and then to over 31%
for those with incomes over $1 million. This deduction includes the
interest on money borrowed to purchase income-producing investments. It is not
clear what these investments might be, but the data suggests that this
provision is more widely used by high income groups.
The proportion that each of these categories formed of total
deductions by income group is shown in Figure 6 below. Deductions relating to
rental properties formed at least half the total deductions claimed for all but
the very highest income groups. These, together with work related deductions
and personal superannuation contributions, formed nearly 90% of the deductions
claimed by those with incomes less than $150,000. The very different pattern of
deductions by those with incomes over $1 million is noticeable.
Figure 6: deductions by major category across income
groups, 2011–12
Source: Parliamentary
Library derived from ATO.
Like deductions, the ability to offset tax
losses from earlier years reduces taxable income for claimants. This provision
allows those with volatile incomes (such as from primary production or
business) to effectively average their incomes across tax years. In 2011–12,
some $1.7 billion of earlier year losses were claimed, with the average
value per claimant rising with income from around $2,000 for those with total
incomes less than $6,000 up to more than $900,000 for those with a total income
over $1 million.
Table 4 lists the major tax offsets in the 2011–12 individual
tax system and their value.[26]
By far the largest offset was the low income tax offset, which as noted above,
had the effect of increasing the tax free threshold from $6,000 to $16,000 for
most tax filers.
Table 4: major tax offsets, 2011–12
|
Item
|
$ million
|
|
Low income
|
8 131
|
|
Termination payment
|
1 102
|
|
Senior Australians
|
949
|
|
Medical expenses
|
600
|
|
Superannuation income stream
|
567
|
|
Mature age worker
|
458
|
|
Spouse
|
405
|
|
Pensioner
|
369
|
|
Zone or overseas forces
|
297
|
|
Private health insurance(a)
|
217
|
(a) The private health
insurance tax offset figure only applies to those who claim this offset through
the tax system, rather than through reduced premiums.
Source: ATO, Taxation statistics 2011–12[27]
The distribution of these offsets by income
groups is very different to the pattern for deductions, mainly because several
of the offsets are targeted at low income earners (see Figure 7 below). Hence
the low income tax offset was the dominant offset claimed by those with incomes
less than $70,000, followed by the senior Australians and pensioner offsets.
Figure 7: average value of major tax offsets by income
group
Source: Parliamentary
Library derived from ATO.
In contrast, the termination payment offset was
of limited average value to those with incomes under $100,000, but formed the
major offset for incomes in the higher ranges, with a value of over $3,200 for
those with incomes over $500,001. While these are average figures across all
the tax filers in each total income range, and this offset was only claimed by
a small proportion of tax filers (some 181,620), the pattern is similar for the
amount claimed per claimant, with the value ranging from under $4,000 for those
with total incomes less than $150,000 up to over $45,000 for those with incomes
above $500,001. As noted in the tax discussion paper:
The employment termination payment tax offset was originally
intended to concessionally tax lump payments made on termination of employment,
as a form of tax smoothing and retirement income support. Over time its purpose
has become less certain. The introduction of the superannuation system has
superseded the offset’s retirement income objective, and the introduction of a
maximum cap on the amount of offset a person can receive limits the extent to
which it can actually smooth the effects of lumpy income.[28]
This suggests that there is limited
justification for this offset, which costs $1.1 billion per year and is
largely of value to those on very high incomes.
Perhaps not surprisingly, the average
offsets for medical expenses, superannuation income streams and private health
insurance generally increased at higher income levels, peaking at around $350,
$340 and $90 respectively for incomes over $1 million.
For the remaining offsets, the distribution
is varied. The mature age worker offset was of most value (between $50 and $80)
for those with incomes between $20,001 and $60,000, while the average value of
the spouse rebate peaked at $58 for those with incomes between $90,001 and
$100,000, and the zone and overseas forces rebate was highest (at $78) for
those with incomes between $100,001 and $150,000.
As noted above, most deductions and some tax offsets are of
more value to those with high incomes. So to what extent do these deductions
and offsets reduce the progressive nature of Australian individual income tax
rates?
Table 5 below shows what proportion net tax formed of
taxable income and gross income (as defined in ‘Income’ above) for each of the
income ranges. It can be seen that the application of deductions and offsets
reduce the tax paid as a proportion of income across all income ranges. While
this gap does increase as incomes rise the difference is not substantial.
Table 5: net tax as a percentage of taxable and gross
income, 2011–12
|
Total income
range from tax return
|
Net tax as %
of taxable income
|
Net tax as %
of gross income
|
|
$1 to $6 000
|
0.79
|
0.52
|
|
$6 001 to
$10 000
|
0.47
|
0.37
|
|
$10 001 to
$15 000
|
0.24
|
0.21
|
|
$15 001 to
$20 000
|
0.74
|
0.65
|
|
$20 001 to
$25 000
|
3.30
|
2.93
|
|
$25 001 to
$30 000
|
5.41
|
4.83
|
|
$30 001 to
$37 000
|
7.76
|
6.98
|
|
$37 001 to
$40 000
|
9.94
|
9.00
|
|
$40 001 to
$45 000
|
12.18
|
11.03
|
|
$45 001 to
$50 000
|
14.63
|
13.25
|
|
$50 001 to
$55 000
|
16.61
|
15.01
|
|
$55 001 to
$60 000
|
18.27
|
16.49
|
|
$60 001 to
$70 000
|
20.22
|
18.19
|
|
$70 001 to
$80 000
|
22.00
|
19.78
|
|
$80 001 to
$90 000
|
23.30
|
20.90
|
|
$90 001 to
$100 000
|
24.73
|
22.10
|
|
$100 001 to
$150 000
|
27.34
|
24.31
|
|
$150 001 to
$180 000
|
30.42
|
27.14
|
|
$180 001 to
$250 000
|
32.69
|
28.93
|
|
$250 001 to
$500 000
|
36.65
|
32.85
|
|
$500 001 to
$1 000 000
|
41.44
|
37.69
|
|
$1 000 001
or more
|
44.60
|
38.66
|
Source: Parliamentary
Library derived from ATO.
While this underestimates the full impact of
the range of deductions and offsets in the tax system, because the gross income
figure used in this analysis incorporates some deductions, it is likely that
even if these other deductions were removed the tax system would still operate
strongly progressively.
However, it should also be noted that while
differences are small in the proportion that net tax forms of taxable and gross
incomes, at the higher income levels a small difference in tax rate translates
to significant tax revenue. For example, if the percentage of tax paid as a proportion
of taxable income was applied to gross income, those with incomes over
$1 million would have paid an additional $1.2 billion in tax for
2011–12.
Of course it needs to be remembered that
removing or capping deductions and offsets may not result in a corresponding
increase in revenue, as tax payers (and their advisors) respond to incentives
in the system. In addition, removal of a tax concession in one area may have
consequences elsewhere. For example, if negative gearing of rental properties
(that is, claiming more in deductions than is earned in income) was removed,
the additional costs could instead be offset against the capital gain realised
when the property was sold, hence reducing future capital gains tax revenue.
This paper has attempted to provide some context to the
‘national conversation’ about individual income tax by providing details of the
value of the major deductions and offsets in the individual tax system to tax
payers across the income range. As such is does not address other tax
concessions available to individuals such as the exemption of the family home
from capital gains tax considerations, or most of the concessions relating to
superannuation.
While there are clearly some deductions that are of much
more value to those with high incomes, in many cases this reflects their higher
income in the relevant area and the increased complexity of their tax affairs.
Rental deductions are the largest deduction on average across all income
ranges, with deductions being greater than the income received in aggregate for
all income groups.
Tax offsets in total are more targeted at those on low
incomes, in many cases removing them from paying any tax. However, the
termination payment offset is second only to low income tax offset in total
value, and is of most benefit to high income individuals.
Overall, these deductions and offsets reduce the proportion
of gross income paid in tax by those on high incomes more than by those on low
incomes. This is not sufficient to significantly distort the progressive nature
of Australia’s individual tax system, but does have considerable revenue
implications.
[1]. Australian
Government, Re:think—tax
discussion paper, the Treasury, March 2015, p. 1, accessed 2 April
2015.
[2]. Australian
Government ‘Have your
say’, Re:think—better tax, Better Australia website, 2015, accessed 2 April
2015.
[3]. Australian
Government, Re:think—tax discussion paper, op. cit., p. 2.
[4]. Ibid., p. 21.
For notes to this figure, see the original.
[5]. M Stewart, Durability
and fiscal sustainability: Federation, health and reform of the tax system,
presentation to the Australian Healthcare and Hospitals Association Think Tank,
16 March 2015, p. 6, accessed 14 April 2015.
[6]. Taxation statistics for 2012–13 were released on 29 April 2015.
[7]. CCH, 2012
Australian master tax guide—tax year end version, CCH Australia,
2012, section 2-000, accessed 14 April 2015.
[8]. Ibid.
[9]. Ibid, section
2-160.
[10]. Ibid., section
2-010. Withholding tax is a flat rate tax on income from these sources held
by non-residents and represents the final tax liability for those payments. It
is withheld from the payment by the payee and passed by them to the ATO. For
further details, see the 2012 Australian master tax guide—tax year end
version, op. cit., section
22–000.
[11]. Australian
Taxation Office (ATO), Taxation Statistics 2011-12, ‘Individuals
tables’,Table
5: Individuals – returns by tax status, 2007–08 to 2011–12 income years,
ATO website, accessed 13 April 2015.
[12]. Department of
the Treasury, Tax
expenditures statement 2014, January 2015, p. 130, accessed 2 April
2015.
[13]. For a more
comprehensive listing of what forms of income are taxable and which are not,
see 2012 Australian master tax guide—tax year end version, op.
cit., Section
10-005.
[14]. Adapted from
ATO, ‘Taxation
statistics 2011–12: about taxation statistics—definitions’, ATO
website, accessed 13 April 2015.
[15]. After net tax
is calculated, credit is applied for tax already paid (such as tax withheld
from salary, tax file number amounts withheld from gross interest and franking
credits) to give the tax payable or refundable. Some offsets are also
refundable if they would otherwise reduce net tax to less than zero.
[16]. This assumes
the income would otherwise be taxed at the marginal tax rate of 45c in the $1
over $180,000, plus the 2% temporary budget repair levy and the 2% Medicare
levy, meaning a total of 49% tax.
[17]. ATO, ‘Individual income tax rates for prior years’,
ATO website, accessed 29 May 2015.
[18]. Australian
Government, Re:think—tax
discussion paper, op. cit., p. 41.
[19]. ATO, ‘Taxation statistics 2011–12: detailed tables, individual
tax, Table 9: selected items, by total income and taxable income, 2011–12
income year’, ATO website, accessed 13 April 2015.
[20]. ATO, ‘Individual tax return instructions 2012’, ATO
website, accessed 15 April 2015.
[21]. For further
analysis of the tax returns for this group see C Ey, ‘The
millionaires who pay no tax’, FlagPost, Parliamentary Library weblog,
20 April 2015, accessed 21 April 2015.
[22]. Australian
Government, Re:think—tax discussion paper, op. cit., p. 40.
[23]. ATO, Taxation
Statistics 2011-12,‘Individuals tables’, Table
13: Individuals – rental income and deductions, 2009–10 to 2011–12 income years,
ATO website, accessed 13 April 2015.
[24]. K Towers, ‘ATO
sights on partners with guide to income-splitting rights and wrongs’, The
Australian, 5 September 2014, p. 31, accessed 14 April 2015.
[25]. ATO, ‘Taxation statistics 2011–12: detailed tables, individual
tax, Table 9: selected items, by total income and taxable income, 2011–12
income year’, ATO website, accessed 13 April 2015.
[26]. Franking
credits on dividend income can also be considered an offset, but as they are
included in ‘income’ and then treated as tax already paid, they are not
included here.
[27]. ATO, ‘Taxation
statistics 2011–12: detailed tables, individual tax, Table 9: selected items,
by total income and taxable income, 2011–12 income year’, ATO website,
accessed 13 April 2015.
[28]. Australian
Government, Re:think p. 53.
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