Sixty-six people earned more than $1 million and paid no income tax in 2020-21, while the majority of Australia’s highest earners reside in Sydney’s eastern suburbs, according to newly released figures by the Australian Taxation Office (ATO).
Key points:
- Sixty-six people who paid no income tax in 2020-21 earned an average of $14.5 million
- Analysis by the Australia Institute found the millionaires spent $219,000 to avoid income tax payments
- ATO data shows Australia has nearly 2.3 million landlords, with 71 per cent owning one property
The ATO’s statistics are based on the tax returns of more than 15 million Australians in the 2020-21 financial year.
Analysis of the data by the Australia Institute shows there were 66 people who earned well in excess of $1 million, earning an average of $14.5 million.
Comparatively, the 2019-20 financial year saw 60 people pay no income tax, earning an average of $3.5 million each.
Using a tax agent to manage tax affairs is an allowable tax deduction under Australia’s taxation system, meaning some of those who earned more than $1 million but paid no tax claimed this deduction.
The Australia Institute’s senior economist Matt Grudnoff said those people spent an average of $219,000 to manage their tax affairs — meaning they were able to claim the money to offset the use of a tax agent.
“Tax is the price we pay for living in a civilised society and everyone should pay their fair share. Being able to afford expensive accountants should not be a way out of paying tax,” he said.
“This is not only unfair but makes Australia less equitable because only the wealthy can afford to hire to get around paying tax.”
Mr Grudnoff said the recent PwC scandal highlighted the problems with tax loopholes, which need to be addressed.
“PwC, while advising the [federal] government on how to close tax loopholes was also advising their rich clients on how to get around it,” he said.
“The government needs to strengthen the public service to crack down on tax loopholes rather than relying on expensive consultants.
“Doing so will not only make the taxation system fairer and more progressive, but it will also discourage the largely unproductive industry focusing on finding and using complex tax loopholes.”
The ATO data also showed that nearly 2.3 million Australians declared rental income in 2020-21, with around 71 per cent of landlords owning one property, 19 per cent owning two properties, and 6 per cent owning three or more properties.
The data shows only 4 per cent of landlords own four or more properties.
On average, landlords made a profit in the 2021 financial year for the first time since at least 2009-10.
This is likely to due to the Reserve Bank keeping interest rates low during the COVID-19 pandemic, and income supplement payments.
What are Australia’s richest and poorest postcodes?
The ATO figures show the country’s highest-earning postcodes were in Sydney, with seven suburbs making up the top 10.
The Sydney suburb of Double Bay had the greatest average taxable income in 2020-21, earning more than $266,000.
Outside of Sydney, the suburbs of Cottesloe and Peppermint Grove in Perth had the third-highest earnings, while Toorak and Portsea were home to Victoria’s highest earners.
The data also showed the bottom 10 postcodes which had the lowest earners in the country were in smaller, regional areas in New South Wales and Queensland.
Queensland was home to six of the small towns with the lowest average taxable income in 2020-21, all based in the state’s west.
The four postcodes in New South Wales were in the north-west region of the state.
All 10 locations have a taxable population of 216 or fewer people.
The workers who are earning the most and least
People working in the medical profession again topped the list as the highest earners, with surgeons earning an average of more than $457,000 in 2020-21.
Anaesthetists were only the second profession to earn an average of more than $400,000, while financial dealers took home an average of $341,000.
Comparatively, food and hospitality apprentices were among workers that reported the lowest average incomes in the 2020-21 financial year, according to the taxation statistics.
This is largely due to its workers being younger and working in part-time or casual jobs.
What does the average person earn?
The average Australian who paid income tax in 2020-21 had an average taxable income of $68,298 — an increase of 6.9% compared to 2019-20.
Men continued to have a higher taxable income compared to women, and had a higher superannuation balance.
The ATO data shows that the median, or middle-earning Australian, made $50,980 in 2020-21 — which effectively negates the impact of extremely high and low incomes.
The typical median Australian paid $11,026 in tax in the 2020-21 financial year, and a median superannuation account balance of $59,833.
The bulk of Australians who filed a tax return in 2020-21 fell into the $45,000 — $120,000 tax bracket, paying 41.5 per cent of all individual income tax.
Individuals who earned $180,001 or more paid 35.4 per cent of net income tax, while nearly 20 per cent of income tax came from people who earnt between $120,001 and $180,000.
An average of $2,381 was deducted as a work-related expense in 2020-21, as Australians continued to work from home during the COVID-19 pandemic — a 3 per cent increase compared to 2019-20.
Compared to those who earned more than $1 million, the average Australian paid just $180 to manage their tax affairs, the same amount as in the previous financial year.
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