Millionaires who paid no tax and the richest and poorest postcodes revealed
Sixty-six millionaires paid no tax in 2018-19, Australia’s highest earners continue to live in Sydney’s harbourside suburbs, and the country’s lowest incomes have been recorded in drought-ravaged central NSW.
The Australian Taxation Office’s (ATO) latest taxation statistics are based on the tax returns of 14.7 million Australians for 2018-19.
Analysis of the data by the Australia Institute reveals there were 66 Australians who earned more than $1 million in that financial year who did not pay a cent of income tax, compared to 73 the year before.
There were a further 156 people who reported an income between $500,000 and a million but paid no tax.
“The Australian tax system is as complex as it is unfair,” said the Australia Institute’s chief economist Richard Denniss.
“While many middle income earners face marginal tax rates of nearly 100 per cent due to the combined impact of their income tax, [and losing] family tax benefits and child care benefits, there are people in Australia making more than $1 million who don’t pay a cent in tax.
“There are always calls to simplify the tax system but few people realise that the complexity isn’t an accident, its the cloak behind which an enormous amount of tax is avoided.”
Sydneysiders earned most, drought-hit regional NSW the least
The ATO figures show seven of the nation’s highest-earning postcodes were in Sydney, while six of the lowest-earning postcodes were in regional NSW.
Sydney’s Double Bay and Melbourne’s Toorak continued to house the highest-earning people in the country, with taxable incomes of more than $200,000 on average.
The 3,572 individual taxpayers in Double Bay – postcode 2028 — had the highest average taxable annual income by postcode, earning $202,598.
The 10,054 taxpayers in Toorak and Hawksburn – postcode 3142 – were in second place, earning an average $201,926.
In third place were the 6,052 residents living in Sydney’s Darling Point, Edgecliff and Point Piper, with an average taxable income of $199,813.
The only postcode outside Sydney or Melbourne in the top 10 was postcode 6011, which includes Perth’s Cottesloe and Peppermint Grove, where the average taxable income was $179,403.
Those living in regional NSW and regional Queensland were among the nation’s lowest average income earners.
The 226 people living in the (at the time) drought-ravaged postcode of 2386 covering Burren Junction and Drildool, located between Walgett and Narrabri in NSW, on average made a loss of nearly $10,000.
The next lowest postcode was neighbouring Rowena – postcode 2387. It had 117 people who on average made less than $1,000.
Doctors continue to dominate incomes, food workers struggle
The taxation statistics showed surgeons had the highest average income – $394,303 – with anaesthetists earning only slightly less, and internal medicine specialists ranked third.
Financial dealers were fourth highest on the income table, earning $275,984 a year on average.
Even before the COVID-19 pandemic hit, hospitality workers, who are often younger and work in part-time or casual jobs, represented occupations with the lowest average taxable incomes.
Near the bottom of the list were “fast food cooks” who earned less than $20,000 on average, while waiters were also in the bottom 10 by income, earning less than $25,000.
Domestic house cleaners made only slightly more — just above $27,000.
Where is the government’s tax revenue coming from?
Overwhelmingly, from you.
The latest stats show just over half of all tax revenue came from individual income tax, with a further 5.2 per cent from taxes on super fund earnings.
The ATO said 15.5 per cent of tax revenue came from the GST, which is charged to consumers.
Just over a fifth of tax revenue came from company tax.
As for who among us paid the most tax, it was generally those on higher incomes.
While just 3.5 per cent of Australian taxpayers fall into the current top income tax bracket by earning more than $180,000 per year, those high-income earners contribute 31.5 per cent of income tax collected.
The biggest group of taxpayers – 41.7 per cent – earn between $37,001 and $90,000, with close to 40 per cent of people who filed tax returns earning less than $37,000.
While more than 80 per cent of people filing tax returns earn less than $90,000 per year in taxable incomes, they account for less than a third of income tax revenue.
However, the Australia Institute’s Richard Denniss argued that is how a progressive taxation system should work, and it is likely to change for the worse after the Morrison government’s stage three tax cuts take effect in 2024-25.
“The government’s stage three tax cuts and their determination to remove the Low and Middle Income Tax Offset is going to make a bad situation worse,” he told ABC News.
“All those Australians earning less than $90,000 per year will be worse off while those earning more than $200,000 will be more than $9,000 better off per year.”
How are we earning the money?
Of the nearly 14.7 million people who filed tax returns in 2018-19, nearly four in five earned income from salary or wages.
More than half (56 per cent) reported earnings from interest, although the typical return was a measly $64 given small savings balances and low interest rates, which have fallen even further since.
While franking credit tax refunds became a major issue in the 2019 election, the ATO’s figures show relatively few Australians claim them. Only one in five taxpayers received a franking credit, and only a small fraction of that group would have received the type of cash refund targeted by Labor’s policy.
The number of landlords continued to edge higher to 2.24 million, and 58.6 per cent of them continued to lose money (excluding potential capital gains) — on average declaring a net rental loss of $1,352.
However, that loss shrank from $1,623 the previous year when 60 per cent of landlords had greater expenses than rental income, and it is likely to have reduced further since then, as mortgage interest rates have fallen dramatically.
The ATO’s data suggest that, while rental deductions remained broadly the same as the previous financial year, landlords enjoyed a slight increase in rental income, narrowing their collective losses.
The ATO’s various crackdowns on fraudulent, ineligible or exaggerated work-related expenses claims appeared to have had some effect, with the number of claims down from 8.95 million to 8.89 million and the average amount claimed falling by $93 to $2,331 (the median, or typical, claim was much smaller, at $1,045).
Fewer Australians claimed deductions for charitable giving, at 4.21 million versus 4.43 million in the previous financial year.
That means only 29 per cent of people donated to tax-deductible charities last year, or at least claimed a deduction for their giving.
Those who did give gave more, though, with the average annual donation rising by $87 to $933, and the typical person’s gift-giving over the year edging up to $120.