TaxSyntax AU

The first $18,200 you earn each year is completely tax-free. After that, income is taxed in slices at increasing rates — in FY 2025–26: 16% up to $45,000, then 30%, 37% and 45% for the top slices.

The most misunderstood idea in Australian tax: moving into a higher bracket never reduces your take-home pay. Only the dollars inside the new bracket are taxed at the higher rate — everything below keeps its lower rates.

Most taxpayers pay a 2% Medicare levy on their entire taxable income, on top of income tax. It funds the public health system. Low-income earners pay a reduced levy or none at all.

A deduction reduces your taxable income, not your tax directly. If you're on a 30% marginal rate, a $100 work-related deduction saves you $30 of tax.

Common deductions:

• Work-related expenses (tools, uniforms, professional subscriptions, self-education related to your current job)
• Working-from-home running costs
• Donations of $2+ to registered charities
• Costs of managing your tax affairs

Your employer must pay 12% of your salary into super (from 1 July 2025) on top of your wage. Inside super, contributions and earnings are generally taxed at just 15% — far below most people's marginal rate — which is why voluntary concessional contributions (like salary sacrifice) are a popular tax strategy.

The Australian financial year runs 1 July to 30 June. Tax returns for individuals lodging themselves are due by 31 October. Your employer withholds tax from each pay (PAYG withholding); your return reconciles what was withheld against what you actually owe — the difference becomes your refund or bill.

A deduction reduces your taxable income; an offset reduces your tax bill directly, dollar for dollar. A $100 deduction on a 30% marginal rate saves $30; a $100 offset saves the full $100. The low income tax offset (LITO) — worth up to $700 — is applied automatically, which is why lower earners often pay less tax than the bracket maths alone suggests.

Sell an asset (shares, ETFs, crypto, an investment property) for more than you paid, and the profit is a capital gain — added to your income and taxed at your marginal rate. There's no separate "CGT rate".

The big rule: hold the asset for more than 12 months and you generally get a 50% discount — only half the gain is taxed. Your family home is usually exempt entirely. Capital losses can offset capital gains, but not salary income.

Heads up — this is changing: reforms legislated in June 2026 replace the 50% discount with cost-base indexation and a 30% minimum tax on gains from 1 July 2027. The discount still applies for now; the main residence exemption is unchanged.

If you have a HELP debt, compulsory repayments start once your income passes a threshold (around the mid-$60,000s, adjusted yearly) and are collected through the tax system as a percentage of your income. The debt is interest-free but indexed to keep pace with costs. Tell your employer you have a HELP debt so extra tax is withheld — otherwise you can get a surprise bill at tax time.

Income from freelancing, gig work or a side business is taxable — the same brackets apply to your combined income from all sources. Key differences: no one withholds tax for you (set some aside each payment), you can deduct genuine business expenses, and once your turnover passes $75,000 you must register for GST.

Higher earners (singles above roughly $97,000, families above roughly $194,000) who don't hold private hospital cover pay an extra 1–1.5% Medicare levy surcharge on top of the standard 2% levy. For many people above the threshold, a basic hospital policy costs less than the surcharge itself — which is exactly the behaviour the policy is designed to encourage.

When the costs of owning a rental property (loan interest, rates, maintenance, depreciation) exceed the rent it earns, the property is negatively geared — and under current rules that loss reduces your other taxable income, like salary. It's been one of Australia's most-used property tax strategies.

The May 2026 Federal Budget wound this back. For established properties bought after 7:30pm on 12 May 2026, rental losses can only offset rental income or property capital gains from 1 July 2027 — not wages. Unused losses carry forward. Properties owned before Budget night are grandfathered, and eligible new builds keep full negative gearing.