Do Now
Calculate the taxable income for each person:
By the end of today’s lesson, you will be able to:
| Taxable Income | Marginal Tax Rate | Tax Payable |
|---|---|---|
| $0 - $18,200 | 0% | |
| $18,201 - $45,000 | 19% | |
| $45,001 - $120,000 | 32.5% | |
| $120,001 - $180,000 | 37% | |
| $180,001+ | 45% |
Copy this down
WRONG: “I earn $200,000 in a year. I pay 45% (almost half) of my income in tax.”
RIGHT: “If I earn $200,000, only the $20000 above $180,000 gets taxed at 45%”
| Taxable Income | Marginal Tax Rate | Tax Payable |
|---|---|---|
| $0 - $18,200 | 0% | $0 |
| $18,201 - $45,000 | 19% | 19c for each $1 over $18,200 |
| $45,001 - $120,000 | 32.5% | $5,092 + 32.5c for each $1 over $45,000 |
| $120,001 - $180,000 | 37% | $29,467 + 37c for each $1 over $120,000 |
| $180,001+ | 45% | $51,667 + 45c for each $1 over $180,000 |
Marcus (NRL player) has taxable income of $85,000
This uses the simplified version of the tax table provided by the ATO. \[\begin{align*} & 5,092 + 32.5c \text{ for each } \$1 \text{ over } \$45,000 \\ =& 5,092 + (\$85,000 - \$45,000) × 32.5\% \\ =& \$5,092 + \$13,000 \\ =& $18,092 \end{align*}\]
Copy this
Calculate the tax owed on a taxable income of $52,000
Show your working in steps like the previous example.
Your turn - silent work
True or False: Explain your reasoning
“A netball player earning $46,000 pays 32.5% tax on all her income”
“Moving from $44,999 to $45,001 income means you lose money overall due to higher tax”
Your turn - silent work
Calculate tax owed:
Extension questions:
Complete the questions in your book
Using the NRL player example (taxable income $85,000, tax $18,092):
Marginal tax rate: 32.5% (the rate on the last dollar earned)
Average tax rate: $18,092 ÷ $85,000 = 21.3%
Which rate matters more for decision making?
Tennis player dilemma:
Sarah earns $118,000 and is offered coaching work worth $5,000. Her friend says “Don’t do it - you’ll move into the 37% tax bracket!”
Is her friend right? Calculate to find out.
Discuss with the person next to you
Key points:
Next lesson: How employers calculate PAYG tax from your pay
Pay As You Go (PAYG)
Instead of paying all your tax at the end of the year, employers deduct tax from each pay and send it to the ATO.
Benefits:
Copy this down
Your employer uses:
The system estimates your annual tax and spreads it across pay periods.
Basketball player: $78,000 annual salary
Step 1: Annual tax = $15,967 (we calculated this last lesson) Step 2: Fortnightly tax = $15,967 ÷ 26 = $614.12
Each fortnight, $614.12 is deducted from pay and sent to the ATO.
Watch and listen
Important choice when starting a job:
✅ Claim tax-free threshold: Normal PAYG deductions ❌ Don’t claim: Higher deductions (no $18,200 tax-free amount)
Rule: Only claim at ONE job if you have multiple employers
##A
A soccer player earns $65,000 annually and is paid fortnightly. Calculate: 1. Annual tax owed 2. PAYG tax per fortnight
##B
A swim coach works two jobs: - Pool A: $35,000 annually
- Pool B: $25,000 annually
Where should they claim the tax-free threshold? Why?
##C
An athletics coach’s payslip shows $520 PAYG deducted fortnightly. Estimate their annual salary.
Your turn - work through each tab