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Income Gross Up Calculator

Ever wondered what percentage of your take home income goes into your tax bill? Using our income gross-up calculator you’ll be able to see how much goes into your taxes and 2% Medicare levy.

Via our income gross up calculator, you’ll be able to see your annual gross income, the annual tax payable, the tax to income ratio, and lastly a chart giving you visualization of the whole computation.

This tool calculates gross income based on net income, using the Australian Tax Office’s personal income tax rates and thresholds. The “Tax Threshold” button in this calculator is where you can check the current 2019-2020 income tax rates and see where your income lies within that.

How We Calculate Your Income Gross Up

We only need your annual net/after tax salary in order to calculate your income to tax ratio. Once you’ve keyed in your annual income, you can then select from drop down the length of time you want. You can choose from yearly, monthly, fortnightly, or weekly.

There is also an option for you to decide if you want to include the Medicare levy in your calculation.

 

What is Gross Income?

Gross income for individuals is the total amount of money earned from all sources before any deductions or taxes are taken out.

It includes wages, salaries, tips, commissions, bonuses, rental income, and any other forms of income. This amount represents the total income earned by an individual over a specified period, such as a year, and is often used to determine eligibility for certain benefits or to calculate taxes owed.

 

It is important to note that gross income does not include any deductions or expenses, such as taxes, retirement contributions, or healthcare costs.

 

How Much Tax Is Deducted From Gross Income?

The amount of tax deducted from gross income in Australia depends on several factors, including your income level, residency status, and whether you are eligible for any tax deductions or offsets.

For the 2022-2023 financial year, the Australian Taxation Office (ATO) uses a progressive tax system, which means that the more you earn, the higher the percentage of tax you will pay. Here is a general breakdown of the tax rates for Australian residents for the 2022-2023 financial year:

  • Income up to $18,200: no tax payable
  • Income between $18,201 and $45,000: 19 cents for each $1 over $18,200
  • Income between $45,001 and $120,000: $5,092 plus 32.5 cents for each $1 over $45,000
  • Income between $120,001 and $180,000: $29,467 plus 37 cents for each $1 over $120,000
  • Income over $180,000: $51,667 plus 45 cents for each $1 over $180,000

It’s important to note that these rates apply to taxable income, which is your income minus any allowable deductions and offsets. Additionally, if you are not an Australian resident for tax purposes, you may be subject to different tax rates.

What is Medicare Levy?

The Medicare levy is a tax that is imposed by the Australian government to help fund the country’s public healthcare system, known as Medicare. The levy is calculated as a percentage of a person’s taxable income and is designed to ensure that all Australians contribute to the cost of healthcare services.

For the 2022-2023 financial year, the Medicare levy rate is 2% of taxable income. However, certain individuals may be exempt from paying the levy or may be eligible for a reduced rate, depending on their income and circumstances.

 

To be exempt from the Medicare levy, you must either:

  • Have a low income or receive certain government benefits
  • Be a foreign resident or have a spouse who is a foreign resident for tax purposes
  • Be a member of the Australian Defence Force or a civilian employee of the Defence Force
  • Be blind or have a severe disability

If you earn less than a certain amount, you may be eligible for a reduction in the Medicare levy. This is known as the Medicare levy low-income threshold, which for the 2022-2023 financial year is $23,226 for individuals and $39,167 for families.

It’s important to note that the Medicare levy is separate from private health insurance premiums, which may also be a requirement in Australia depending on your income and circumstances. While private health insurance can provide additional benefits and coverage beyond what is offered by Medicare, it is not a substitute for paying the Medicare levy.

Overall, the Medicare levy is an important source of funding for Australia’s public healthcare system and helps ensure that all Australians have access to quality healthcare services.

When Do You Need To Calculate Your Gross-up Salary?

You may need to calculate your grossed-up salary in several situations, including:

  • Fringe Benefits Tax (FBT): If your employer provides you with fringe benefits such as a company car, discounted or free goods and services, or other non-cash benefits, they may be subject to FBT. In this case, your employer will need to calculate the grossed-up value of the benefit and include it as part of your taxable income.
  • Salary packaging: If you enter into a salary packaging arrangement with your employer, you may receive non-cash benefits such as additional superannuation contributions or a laptop computer. In this case, the value of the non-cash benefit will need to be grossed up and included as part of your taxable income
  • Income-tested government benefits: If you receive income-tested government benefits such as family tax benefits or the child care subsidy, your grossed-up salary may be used to determine your eligibility for these benefits. This is because your grossed-up salary takes into account the value of any non-cash benefits or fringe benefits you receive.
  • Superannuation contributions: If you make pre-tax contributions to your superannuation fund, your employer may calculate your grossed-up salary to determine the correct amount of superannuation contributions to make on your behalf.

In general, if you receive any non-cash benefits or fringe benefits from your employer, or if you make pre-tax contributions to your superannuation fund, you may need to calculate your grossed-up salary to determine your taxable income. It’s important to note that the grossed-up amount may also affect other aspects of your financial situation, such as your eligibility for government benefits or the amount of tax you need to pay.

Have Questions?

If you have any questions regarding your gross up income or how the calculation works, contact one of our Excellence Finance mortgage brokers today. Or, connect with us at info@excellencefinance.com.au or call us (02) 9609 4655​. We’d be more than happy to address your concerns.

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