Tax Return Calculator

The Medicare Levy is a 2% tax on your taxable income that helps fund Australia's public health system. Most taxpayers are required to pay this levy, but there are exemptions and reductions available for low-income earners and certain categories of taxpayers.

The Medicare Levy is typically paid when lodging your tax return, not withheld from regular pay. This is why you might see a tax payable amount equal to the Medicare Levy in your calculation.

The Medicare Levy Surcharge is an additional tax that applies to high-income earners who don't have private health insurance. The surcharge is designed to encourage Australians to take out private health insurance and reduce pressure on the public health system.

The surcharge rates for 2024-25 are:

• Base Tier: No surcharge for income up to $97,000 (single) or $194,000 (family)
• Tier 1: 1.0% surcharge for income between $97,001 and $113,000 (single) or $194,001 and $226,000 (family)
• Tier 2: 1.25% surcharge for income between $113,001 and $151,000 (single) or $226,001 and $302,000 (family)
• Tier 3: 1.5% surcharge for income above $151,000 (single) or $302,000 (family)

The surcharge is calculated on your total income, not just your taxable income. This means it includes all income sources, even those that might be tax-free or have special tax treatment.

Deductions are expenses that you can claim to reduce your taxable income. Common deductions include:

• Work-related expenses (uniforms, tools, travel)
• Charitable donations
• Self-education costs
• Investment expenses
• Professional memberships
• Tax agent fees

The calculator allows you to input your deductions to get a more accurate estimate of your tax return.

Capital Gains Tax (CGT) applies when you sell an asset for more than you paid for it. The gain is added to your taxable income and taxed at your marginal tax rate. However, there are various exemptions and concessions available:

• 50% discount for assets held for more than 12 months
• Main residence exemption for your home
• Small business concessions
• Inheritance and gift exemptions

The calculator includes options for capital gains and losses, and the 50% CGT discount for long-term holdings.

The tax implications of debt depend on how the borrowed money is used:

• Investment Debt Interest: Interest on loans used to purchase income-producing investments (like shares or rental properties) is generally tax-deductible. This is the basis of negative gearing, where the interest and other costs exceed the income from the investment.
• Other Tax-Deductible Debt: Includes interest on loans used for self-education, business expenses, or other income-producing activities.
• Non-Deductible Debt: Interest on personal loans (like car loans or home loans for your primary residence) is NOT tax-deductible.

When you claim deductible debt interest, it reduces your taxable income and can increase your tax refund or reduce the amount you owe. This is particularly relevant for property investors using negative gearing strategies, where the tax deduction helps offset the costs of holding an investment property. Remember to keep records of how borrowed money is used, as the ATO requires proof that the debt was used for income-producing purposes.