Income tax in Australia is the most important revenue stream within the Australian taxation system. Income tax is levied upon three sources of income for individual taxpayers: personal earnings (such as salary and wages), business income and capital gains.
Income received by individuals is taxed at progressive rates from 0 to 45%, plus a Medicare levy of up to 2%, while income derived by companies is taxed at a flat rate of either 30% or 27.5% depending on annual turnover. Generally, capital gains are only subject to tax at the time the gain is realised and are reduced by 50%. Income tax is collected by the Australian Taxation Office.
In Australia the financial year runs from 1 July to 30 June of the following year. Income tax is applied to a taxpayer’s taxable income, which is calculated, in a broad sense, by applying allowable deductions against the taxpayer’s assessable income.