Budget Time!! Australia Government Tax Cut

The words "Tax Cut" ring like a Pizza delivery guy arriving at the doorstep for the common Aussies and Tax Payers who live in Australia. So why Tax Cut sounds like winning a lottery? Because it is such a big deal in Australia. Unfortunately a big majority of people do not fully understand how it works except the accountants. This year, The Treasurer, Peter Costello, announced a generous tax cut for 07-08.

What does this mean to the commoners? Most annual income threshold tiers from $$50,000, $60,000 and so forth onwards, will have an extra $750 in the pocket to spend in the next fiscal year which begins this coming July. Is $750 generous enough? Take $50,000 income earner, saves $750 but has paid appx $11,000 on tax - that is equivalent to roughly 7% of discount. Myer and David Jones (leading retail stores - Parkson Grand in Malaysia), are not expecting to have throng of consumers crashing through their door for an annual sales of 7%.

Income for the first $25,000 will be taxed at 15%, then doubles to 30% from $25,001, next whopping 40% from $75,001 and last but not least, if you have a fat salary, $150,001 gets 45%. Nice - if you are the collecting it. Believe it or not it is actually a better rate than the previous year, hence the Tax Cut! So for those of you, who will get promoted to a $150,000 package next year, before you start buying a new Tag Heuer. Lets quickly examine how much you will nett, hmmm....appx $101,250 - that's averaging 32.5% of tax. But then again, Australia has a huge public service expenditure.

In Malaysia, the highest tax is 28% for those wankers who are lucky enough to earn filthy $250,000. The nett for $150,000 as comparison to the above will be $122,025 - averaging 18.6%. In other words tax is much lower in Malaysia. But of course, Malaysia has endless of government subsidies like the fuel and gas.

An apple for an apple... Hope this gives you an idea of how the new tax cut will affect you.

P/S : Australian Goverment also applies GST (Goverment Service Tax - dont ask long story) of 10% on almost every purchase of goods, except perishables ie eggs, juice etc. That is a lot if you allocated X amount of disposable income per month, most of that will be taxed another 10%.

Comments

[Paul Habermann]

Good article, but you should of mentioned the GST, which is on top of Y tax. It's basically an election bribe. PS, with an extra $750 in my pocket, let's go out and get sloshed.

[Author]

Oh yes Paul. But I didnt want to bore. But in the hindsight I should have..

[Ah Long]

Now i know how high is Australia income tax, this is really crazy compare to Singapore, the average effective tax rate is about 4% to 7%, meaning people average pay about 4% to 7% of their income for income tax, Maximum tax rate is 20%.