In Australia, the financial year runs from 1 July to 30 June.

Individual tax is determined using marginal tax rates. This means the rate of tax charged increases proportionately to increases in your taxable income. The greater your level of taxable income, the higher the marginal rate of income tax applied.

We will use the 2023/24 tax rates in our examples, shown opposite.

To calculate the tax payable on your taxable income, work out your tax in each bracket and add it up.

We have calculated Fred’s tax payable on $92,000 of taxable income for 2023/24 in the second table, being $20,367.

Australians may also pay a Medicare Levy on their taxable income at a rate of 2%, depending on their income. An additional Medicare Levy surcharge may also apply if private hospital insurance is not held and income is over the relevant Medicare Levy surcharge thresholds. The Medicare Levy and Surcharge will be discussed in greater detail below.

In this example, Fred would have to pay a Medicare levy of 2% on his taxable income of $92,000. This is calculated as $1,840.

This brings Fred’s total tax payable to $22,207.