Do Australians or Australians PR pay 40% of their annual income in tax every year? Yes, according to most Singaporeans I knew.
In reality, there are different tax levels for different income groups. Most importantly, there are tax rebates. These rebates aren't anything like our rebates in Singapore, i.e a pittance. In Australia, there could be many items you can do a tax claim with, especially work related items. For example self education items related to your jobs such as taking a course, buying related books or publications etc.
Travel and car expenses for those who use their vehicle between jobs while at work can be deducted from your tax. This alone could potentially shave a few good percent from your tax. Work clothes are tax rebatable, particularly for those who wear a uniform or specialised clothing such as protective gears, to do their work and even the dry cleaning costs for these uniform.
You can file tax rebate such as 30% of out of pocket childcare expenses up to $4,000. They also give a tax cut of 30% of your insurance costs. These are only the tip of the iceberg. I am not a pro on taxes but there are enough sites out in the web to verify these and other tons of items that are tax deductible that I don't have the time to read up yet.
Tax reliefs cannot be underestimated. They could come out to thousands of dollars and take your overall tax contributions from double digits percentages to a single digit.
Rebates aside, back to the topic: Do Australians tax contributors pay 40% of their income as tax?
Take a look at the income brackets and the different tax levels. (Based on 2011 tax model)
0 – $6,000
Nil
$6,001 – $37,000
15c for each $1 over $6,000
$37,001 – $80,000
$4,650 plus 30c for each $1 over $37,000
$80,001 – $180,000
$17,550 plus 37c for each $1 over $80,000
$180,001 and over
$54,550 plus 45c for each $1 over $180,000
Eg. If you rake in about $60,000, your gross tax (not including tax rebates, more into that later) would be
(60,000 - 37, 000) * 0.3 + $4650 = $11,550
Your gross tax would be $11,550/$60,000 x 100% = 19.25%, excluding tax rebates. Should you take off 5% of this from rebates, you may be contributing around 14.25% at the end of the year.
A far cry from the 40-50% figure we always thought it is, isn't it?
If I live in Australia with my current income of about S$50K, I shld be paying abt $7K to $8K. I only pay about $700 now. Its abt 10x more taxes than Sg.
ReplyDeleteIt's the currency and balance out a more quality life... i think tat is our whole objective of migration :)
DeleteGintai,
ReplyDeleteS$50K = A$37.9K at current exchange rate 1.32
Based on 37.9K, you'd pay 4650 + 900*.3 = $4920. This would be reduced by allowable deductions. 13% tax. On $50K in singapore I don't know what the % would be but it would be small.
I agree it's way more than Singapore but the salaries are way higher. I say this from experience as for my position, I struggle to get S$80K and in Australia can command A$120K for a similar position (working 37hrs). Tax on that amount will be in the region of 25-30% depending on deductions.
Not true. Please be prepared to take pay cut if you do not have local working experience
DeleteDonald! Of course, they require local experience just like when I was seeking for work in the UK and it is also a pre-requisite, unlike Singapore where boars from 3rd world roams freely and eat without the need to gain local experience, and the government there is willing to tag it along despite telling their citizens they have demonstrated measures in place to curb the foreign worker population and rein in tight on companies that takes in them liberally. Ever heard the employer suggested to that foreigner from 3rd world to take up citizenship there, especially from an ethnicity from a largest East Asian nation.
Delete@Gintai: Brother, I don't mind sharing my case with you.
ReplyDeleteI take in about $2.4k (gross) as a Project Manager (construction) excluding car allowances of about $600. So my total gross is around SGD$3k.
I work here as a trade assistant (the lowest position) in a steel workshop here. I get paid AUD$900-$1300 weekly (depending on OT), after tax and superannuation (the cpf here).
I don't care about tax as long as I make more than I did in Singapore after tax. Some people pointed out employer's contribution (16.5 vs 9%) but there is always exchange rate to bring it to level.
You forgot the biggest tax rebate of all.. "negative gearing"
ReplyDelete@Anonymous: I didn't forget it but I don't think Singaporeans are that interested. They seemed to be contented with the '45% tax in Australia' stereotype.
ReplyDeleteHi asingaporeanson, thank you so much for sharing this information about the tax structure. Time's running out for the PAP as people are getting wind of the crap that has been coming out from their propaganda newspaper in SG.
ReplyDeletewell if you are working and studying and a non pr within the first 6 months, you are paying shitloads of tax even after rebates, I know I did. Though that did not stop me from being in Sydney for 6 years. Eventually I called it quits and moved on. The inadequacies of national bureacreacy got to a point where I could no longer deal with it in a happy manner, despite the vast increase in $$$$ vs cost of living vs quality of living in both countries.
ReplyDeleteHi BigB3n
DeleteMind telling us your story? It's good to hear both sides of the coin.
-Nauticar
oops pardon the typo bureaucracy
ReplyDelete@BigB3n : Hi bro, don't worry about spelling and grammar here. it's not a school :)
ReplyDeleteI don't really care how much Im taxed as long as I save more money than I could in singapore. i am now and how strangely it differs for both of us. i'm happy you are better off elsewhere. doesn't matter where as long as you are comfortable about it.
Income tax is not the full story... can nobody see that we pay so much indirect taxes in Sg? COE, GST, ERP, Road tax etc... Even utility bills are taxed... So... still believe the papers when they tell you that you are paying less taxes in Sg???
ReplyDeleteCOE, ERP and road tax are luxury taxes in Singapore, everyone should know and it's an optional. If you don own a car you do not need to pay those taxes. However, you must pay tax if you earn a living in Australia.
DeleteDonald! Could you kindly explain how an HDB apartment - a necessity costs S$300k++, which is the lowest price from the government (the open market is a lot higher with shorter remaining lease) affordable to working-class individuals. A residence is affordable when the income to house debt ratio is 7 times. Any other residence with a debt that needs more time (for instance, 15, 20 or 25 years) to serve is considered luxury (unaffordable) to me. I earn below 2k monthly, inclusive of CPF and I know I will never afford a home there. And a roof over my head is NOT OPTIONAL!!! Oh! Can I say I don't want to serve NS, which is a taxation that PRs there do not have to commit to and gain similar benefits of buying a BTO?
DeleteI paid a visit to the PayScale site. I'm amazed by the huge difference in salary in Perth compared to the other cities. Are nurses in huge shortage in Perth & hence the difference?
ReplyDeleteI'm a registered nurse, currently awaiting registration from APHRA though it's a slow & painfully long process. I enjoyed your blog coz I can so identify with the internal processes you went through when deciding whether to make the move. For me, 八字还没一撇. Gotta get approval for registration first.
Good luck Jo.
DeleteBear in mind, the amount of salary is pre-taxed. Having said that, many find themselves paid more in Australia, some the opposite. It depends. So may luck be with you.
Jo
DeleteI am also a health professional and unfortunately June to November is always a bad time to apply new registration from scratch.
The nurses rego renewal is due June-Aug depending on which states and for doctors Sept-Oct. This is the time when they are "very busy" but not forgetting that the rest of the year they also have 12 other health professional registration to worry about
Although they may claim X days processing time, the truth of the matter is that:
1. it is X working days not calender days
2. it assumes the your application is properly completed with the right paperwork
3. the clock does not start when it arrives at one of the many state office, it only start when a staff member look into your file (crazy I know but I personally had been given this excuse).
4. if you plan to work in NSW (or your address is in NSW) and somehow the application form arrives in another state office, they will not process it (eventough they are supposed to be the same) but they will send it to the NSW office.
5. You definitely need to make sure you give them everything you need up front (not sure u call them or email ASAP and BTW they dont work Sat Sun) since it can sit a folder for days for "action" by someone and anyone.
But after you get your rego, it will not be so painful since you can do it online in future renewals.
I dont know your situation but most nurses from South East Asia can rent an apartment in Sydney and buy a car within 6 months on a single nurse pay depending on where you stay and what you buy. The problem is that there is a huge difference in rental property cost in different areas and similar for cars new or second hand.
Sometimes in Sydney it is cheaper to live in one area and drive to work including petrol and parking costs, but you can spend up to 1 hour driving one direction (although for nurse the shift work you may miss most of the bad traffic: 7am, 3,30 pm 10.30pm shifts) BUT the main problem is the suburb you live in can be pretty bad or unsafe at night so there is always a price there.
So when you arrive and temporarily staying someone while you goto work, sit somebody down who knows the city and ask them to list the area they would think is OK to stay on a map. If you are looking at a specific suburb ask someone who is a local there: there are overlapping areas whereby there are good streets on a 'bad' suburb and bad streets on a good suburb.
Tax and net income are very subjective for individual. If you don't own a car in Singapore, why do you need to pay COE, ERP and road tax. Does it mean if you cant live without a car you have to migrate to Australia? Some people don't mind paying higher tax in Australia, especially those who earn 80K or less. Once you hit more than 80K, you will pay sky high tax and you do not get back much tax return from the taxman. Worse still if husband and wife both are working. You almost can't get anything back unless you do property investment. If your household income is more than 150K then you are in the worst category of the bunch. If you are the person who do not like career advancement or promotion and wish to work at low level and also keep below 80K for a single income then Australia is better off then Singapore.
ReplyDelete[quote]Your gross tax would be $11,550/$60,000 x 100% = 19.25%, excluding tax rebates. Should you take off 5% of this from rebates, you may be contributing around 14.25% at the end of the year.
ReplyDelete[/quote]
nix....just talk to a accountant frd...it is not 14.25% tax we are paying. that is just a disillusioned average payable tax. instead of 19.25% u wrote, it shud be ruffy 30% tax paid. becos, after 37k mark, u r paying 30% tax for every dollar earned go fig
don't think i need an accountant to understand what was written in my payslip every fortnight
Deletei was having a discussion with some singaporeans about the tax system and this post came to mind. because in australia we are too free and knock off at 5pm everyday, i did some algebra based on 2013-14 individual tax rates available here:
ReplyDeletehttps://www.ato.gov.au/rates/individ...ome-tax-rates/
and found that to be taxed at an effective 40% of your salary, you need to be earning $2.7million per annum (and have some really bad tax planning advice)....
just FYI and for discussion
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