Tax Rates 2020-2021 Year (Residents)
This tax table reflects the tax scale applying from 1 July 2020 to 30 June 2021 for the ATO’s 2021 personal individual tax rates.
|Taxable Income||Tax On This Income|
|$0 to $18,200||Nil|
|$18,201 to $45,000||19c for each $1 over $18,200|
|$45,001 to $120,000||$5,092 plus 32.5c for each $1 over $45,000|
|$120,001 to $180,000||$29,467 plus 37c for each $1 over $120,000|
|$180,001 and over||$51,667 plus 45c for each $1 over $180,000|
The 2021 financial year starts on 1 July 2020 and ends on 30 June 2021.
Tax scale changes from the previous year came from tax cuts brought forward as part of the “JobMaker Plan – bringing forward the Personal Income Tax Plan” contained in the 2020-21 Budget and resulted in the following adjustments (reflected in the above table):
- The 19% rate ceiling was lifted from $37,000 to $45,000; and
- The 32.5% tax bracket ceiling was lifted from $90,000 to $120,000
There are low income and other full or partial Medicare exemptions available. A Medicare Levy Surcharge may also be applicable and is applied on a progressive basis if eligible private health insurance cover is not maintained.
Recent History of Tax Scale Adjustments
The new rates lifted the 32.5% rate ceiling from $87,000 to $90,000 in the 4 years from 1 July 2018 to 30 June 2022, with further adjustments scheduled from 1 July 2022 and 2024.
Subsequently announced in Budget 2020 (on 6 October 2020) the 1 July 2022 scale adjustments were brought forward to apply from 1 July 2020 (2020-21 year), and the LMITO (Low and Middle Income Tax Offset) was retained for the 2020-21 year in addition to the Low Income Tax Offset brought forward at the higher value of $700. The previously legislated tax scale adjustments to apply from 1 July 2024 remain unchanged.
The tax bracket changes announced in Budget 2020 (reflected in the table above) were:
- the 19% rate ceiling lifted from $37,000 to $45,000
- the 32.5% tax bracket ceiling lifted from $90,000 to $120,000
For a taxpayer with taxable income of exactly $120,000, the saving is $2,430. For a taxpayer with taxable income of $45,000, the tax saving is $1,080.
The nominal tax free threshold of $18,200 is effectively raised to $23,227 for low income earners after inclusion of the Low Income Tax Offset and the Low & Medium Income Tax Offset.
2021 Tax Calculator
* Calculator Notes: Calculations are estimates based on legislated tax rates. Rounding errors may be present in the calculated results. Medicare: For the purposes of estimation the calculator assumes a Medicare exemption up to the single income earner exemption level for 2020-21 which is $23,226. The Medicare percentage selection box is included should you wish to adjust the calculated Medicare percentage at higher levels of income. The current Medicare income exemption levels can be reviewed here. LITO: The full value of LITO + LMITO on lower levels of income is $955, however it is not refundable, and so the actual credit is limited to the amount of tax payable on lower levels of income. See LITO info here.
Foreign residents’ capital gains tax
Temporary residents who are Australian tax residents are not affected by the change.
As the legislation became law on 12 December 2019, affected taxpayers will, if necessary, need to lodge or seek amendments for relevant tax returns back to 2016-17. The ATO has advised that late interest and other penalties will be reduced, provided the taxpayer seeks to comply “within a reasonable timeframe”。
There are limited exclusions from the rules for certain life events occurring within 6 years of becoming a foreign resident.
Super rules for older Australians
Loosening of super contributions rules for older Australians, taking effect from the 2020-21 financial year, include:
- From July 1, 2020 Australians aged 65 and 66 are able to make voluntary superannuation contributions, both concessional and non-concessional, without meeting the Work Test. This aligns the Work Test with the eligibility age for the Age Pension. [Note that under a Budget 2021 proposal, the work test is also to be removed on non-concessional or salary sacrifice super contributions by persons aged 67 to 74.]
- The age limit for spouse super contributions increased from 69 to 74 years.
- The age limit for access to the bring-forward arrangements is extended to those aged 65 and 66.
The Coronavirus response comprised a number of measures announced and legislated beginning from March 2020. A number of measures extend into the 2020-21 year and beyond.
For an overview of the measures see: Coronavirus response measures.
New or amended business measures applying from 2020-21 include (not exhaustive):
- Loss carry-back provisions allow tax losses from the 2019–20, 2020–21 or 2021–22 years to offset previously taxed profits from 2018–19 or later (see company tax rates) [Also a Budget 2021 proposal to extend this to 2023]
- Div 7A benchmark interest rate for 2020–21 is 4.52%
- Small business entities and medium business entities can fully expense depreciating assets acquired from 7.30 pm AEDT on 6 October 2020 until 30 June 2022 [Also a Budget 2021 proposal to extend this to 2023]
- The instant asset write off threshold for small businesses was initially increased to $150,000 until 31 December 2020, with first use/ installation date extended to 30 June 2021.
- This has since been enlarged and extended from 7:30pm (AEDT) on 6 October 2020 until 30 June 2023. Businesses with turnover up to $5 billion can deduct 100% of eligible depreciable assets of any value (including improvements to existing assets) in the year of installation. See further notes: instant asset write off.
Tax Time 2021 – From the Tax Office, an overview of key changes and new measures to be aware of when completing 2020-21 Tax Returns
This page was last modified 2021-09-30