Australia’s 1 per cent: Budget reliance on high and middle income earners grows Shane Wright The Sydney Morning Herald Updated June 7, 2021
Australian Taxpayers in 2017 worked in Services: 78.8%, Construction: 9.2%, Manufacturing: 7.5%, Agriculture: 2.5%, Mining: 1.9% of workforce.
Click here for the Gross Income and Tax Payable report on these 11 million taxpayers, sorted by taxable income range (and sex).
Four in five Australians earn less than $100,000 with new tax figures revealing the federal budget is increasingly reliant on the nation’s best-paid 1 per cent to cover the cost of growing services and infrastructure. Data from the Australian Tax Office also shows that to be a member of the top 1 per cent of taxpayers requires a taxable income of at least $350,000. By contrast, an income of at least $700,000 is needed to get into the top 1 per cent of American taxpayers. The annual taxation statistics from the ATO, covering the 2018-19 financial year, reveals there were almost *14.7 million individual taxpayers that year, a 2.7 per cent increase over 2017-18, who paid a combined $213 billion in income tax. * Only 11 million taxpayers actually paid tax, the other 3.7 million taxpayers who filed tax returns received all the tax paid during the year (via PAYG, etc) back as a refund. Eighty per cent of those taxpayers had a taxable income of less than $100,000, the lowest proportion on record. In 2012-13, 90 per cent of taxpayers had a taxable income below $100,000. One in nine of all Australians, with a near even split between men and women, have a taxable income between $50,000 and $60,000. The ATO, which broke the nation’s taxpayers up into single percentile groups, revealed the top 1 per cent included 82,000 men who had an average taxable income of $760,853 while for women the average was $753,481. The men declared $62.6 billion in taxable income while 28,000 women declared $21.4 billion. The men paid $26.5 billion in tax, the most of any group, while women paid $9.1 billion. Combined, these 110,000 people paid 17 per cent of the nation’s income tax. Those in the top tax bracket, which starts at $180,000, paid almost $70 billion or a third of the nation’s income tax bill. As part of the federal government’s three-stage tax plan, which started in the 2018-19 financial year, high-income earners will not receive a tax cut until 2024-25. The Labor Party has yet to decide whether it will continue to support these cuts. The tax cuts will change the 32.5% tax rate to 30%, raise the upper threshold for this 30% tax bracket from $120,000 to $200,000, remove the 37% tax bracket altogether, and raise the 45% lower threshold from $180,000 to $200,000. Ratings’ agency S&P Global, which on Monday lifted Australia’s triple A credit rating to stable from negative on the back of the country’s strong economic recovery, said the budget was benefiting from growing tax collections from companies and individuals. “The pace of the economic recovery, and exceptionally strong demand for key commodity exports – namely iron ore – have provided a timely boost to government revenues such as company and income taxes, the goods and services tax, and conveyance duties. We expect key revenue lines to outperform the central government’s own forecasts,” it said. The OECD, in its global outlook released last week, said the Australian economy would be “buttressed” by the federal government’s budget decision to extend the low and middle-income tax offset for another year while urging states to overhaul their property taxes. “More states and territories should replace taxes and fees on property transactions with a recurrent land tax to promote mobility and more efficient property use,” it said. The International Monetary Fund, in its latest full overview report of the Australian economy, said the economy would strengthen if there was less reliance on direct personal income tax for government revenue. “The tax system is relatively inefficient with a comparatively large share of direct taxes,” it said. Of the men in the highest earning group, more than 18,500 reported a net capital gain of $6.8 billion – by far the most of any income group in the country. Another 13,000 women in the top 1 per cent declared $599 million in net capital gains. Men reported average rental losses of $6100, the largest of any group, but women reported net rental income of $5180 — one of the few groups not to lose money on their rental properties. Amongst this group are the nation’s best-paid people, headed by 4150 surgeons who had an average taxable income of $394,303. But within this occupational grouping, some did much better than others. The best-paid people in the country are its 180 neurosurgeons. The 150 male neurosurgeons had an average taxable income of $630,000 while the 30 female neurosurgeons had an average taxable income of $304,290. The next highest paid group were the nation’s 125 ear, nose and throat surgeons. Of this group, the 102 men had an average income of $509,428 compared to the 23 women with an average $287,130. Double Bay in Sydney remains home to the people with the nation’s highest incomes, where 3572 taxpayers declared an average taxable income of $202,541. No.2 postcode in the country was Melbourne’s Toorak at $201,926. While paying a lot of tax, some high-income earners manage to avoid handing over anything to the ATO. There were 42 people who earned more than $1 million in the year but had a taxable income of less than $6000. This group had $205 million worth of tax deductions, of which $158 million were gifts or donations. The number of people earning more than $1 million in income grew by 3 per cent to a record 15,358. More than 6600 of them live in NSW while another 4000 are in Victoria. Among middle Australians, the income split between the sexes is much more even with an average income of around $59,982. Men declared $3.5 billion in taxable income compared to $3.1 billion for women. Men paid $629 million in net tax while women in this group paid $611 million. Both men ($2388) and women ($959) registered average losses on their rental income while overall capital gains were $18,700 for males and $19,800 for females. They also have some of the highest HELP debts of any group, with men owing an average of $26,400 while women owe $23,500. The figures do show the bottom 1 per cent, at an income of less than $21,907, but this includes part-retirees drawing a part-pension who are also earning taxable income from investments including rental income. The next most important source of revenue for the government is the business sector. There were one million companies tracked by the ATO through the year. Very large firms accounted for just 0.1 per cent of the number but paid 62 per cent of total tax, while 76 per cent of firms were considered “micro” entities that paid 11 per cent of the company tax bill. Finance companies such as banks paid $25 billion worth of company tax while the mining sector paid $22 billion. The nation’s superannuation funds, which do not count towards company tax, paid $29 billion in tax.
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