Millionaires who pay no tax and Australia’s richest and poorest postcodes revealed (ABC 18.7.20)

Seventy-three millionaires paid no tax in 2017-18, while Australia’s richest people live in Sydney’s Double Bay, on average earning more than 13 times the nation’s poorest, who live in central-west Queensland.

The latest taxation statistics for 2017-18 are based on the tax returns of 14.3 million Australians.

Seven of the nation’s average highest-earning postcodes are in NSW, while six of the lowest-earning postcodes are in Queensland.

There were 73 Australians who earned more than $1 million in the 2017-18 financial year that did not pay a cent of income tax, up from 69 the year before.

Negative gearing remains a popular tax break.

More than 1.3 million of the nation’s 2.2 million landlords declared a net loss on their investment properties.

Almost 1.8 million of those landlords had a mortgage on their property and were claiming interest deductions — that is about 80 per cent of property investors.

Australia’s richest postcode: 2028

Postcode 2028, Double Bay, had the highest average taxable income, at $242,428.

The second average highest earners, with an average taxable income of $198,828, live in postcode 2027, taking in Sydney harbourside suburbs Darling Point, Edgecliff, HMAS Rushcutters and Point Piper.

The third average highest, earning $196,816, reside in Melbourne’s postcode 3142, taking in Hawksburn and Toorak.

Ten highest-earning postcodes 2017-18

Postcode Suburb Average Taxable Income
NSW 2028 DOUBLE BAY $242,428
NSW 2027 DARLING POINT, EDGECLIFF, HMAS RUSHCUTTERS, POINT PIPER $198,828
VIC 3142 HAWKSBURN, TOORAK $196,816
NSW 2023 BELLEVUE HILL $193,440
VIC 3002 EAST MELBOURNE $185,437
NSW 2030 DOVER HEIGHTS, HMAS WATSON, ROSE BAY NORTH, VAUCLUSE,

WATSONS BAY

$181,954
NSW 2110 HUNTERS HILL, WOOLWICH $177,615
NSW 2088 MOSMAN, SPIT JUNCTION $171,904
NSW 2063 NORTHBRIDGE $169,142
WA 6011 COTTESLOE, PEPPERMINT GROVE $167,090

The nation’s poorest postcode: 4732

The nation’s poorest income earners reside in mostly small towns in Queensland.

Postcode 4732, which takes in Muttaburra and Tablederry in central-west Queensland, has the lowest average taxable income in the country at $14,681.

This was followed by postcode 4426, including Jackson, Jackson North and Jackson South, with an average income of $19,396.

And third lowest was NSW’s 2308 — the Newcastle University, Callaghan area — with an average income of $21,054.

Ten lowest earning postcodes

Postcode Suburb Average Taxable Income
QLD 4732 TABLEDERRY, MUTTABURRA $14,681
QLD 4426 JACKSON, JACKSON NORTH, JACKSON SOUTH $19,396
NSW 2308 NEWCASTLE UNIVERSITY, CALLAGHAN $21,054
QLD 4611 MONDURE, MARSHLANDS $22,524
QLD 4467 MUNGALLALA, TYRCONNEL, REDFORD $22,795
SA 5308 GALGA, MANTUNG, COPEVILLE, PERPONDA, MERCUNDA $24,714
NSW 2387 BULYEROI, ROWENA $25,623
VIC 3889 ERRINUNDRA, MANORINA, CLUB TERRACE, COMBIENBAR,

BEMM RIVER, CABBAGE TREE CREEK, BELLBIRD CREEK

$27,079
QLD 4612 KAWL KAWL, HIVESVILLE, KEYSLAND, STONELANDS, WIGTON $27,617
QLD 4423 TEELBA, GLENMORGAN $27,722

Best paid occupation: surgeon

The 2017-18 statistics also cover average taxable income by occupation and state.

Medical practitioners again dominated the highest earning occupations, much like the year before.

Surgeons on average took home $402,582 in taxable income.

Anaesthetists filled the second spot with an average income of $382,674, and internal medicine specialists came in third with an average income of $301,129.

Financial dealers took fourth place with an average income of $272,895, while psychiatrists took fifth place with an average income of $225,206.

Top paid occupations:

Occupation Average Taxable Income
Surgeon $402,582
Anaesthetist $382,674
Internal medicine specialist $301,129
Financial dealer $272,895
Psychiatrist $225,206
Other medical practitioners $215,728
Judicial or other legal professionals $184,958
Mining engineer $179,288
Chief executive officer or managing director $170,336
Engineering manager $156,015

The lowest-earning professions were dominated by hospitality, with farm work and baggage handlers also featuring.

Fast-food cooks are the lowest earners (average income $18,608), followed by hospitality employees ($19,102), hospitality apprentices or trainees ($19,431), farmers ($20,089), farm, forestry or garden workers, apprentices or trainees ($20,686), and baggage handlers ($22,244).

Million-dollar incomes with no tax bills

There were 14,907 Australians who declared a total income of more than $1 million in 2017-18.

Combined, they reported $37.4 billion of income — an average of just over $2.5 million each — and collectively paid $15.9 billion in tax, a total tax rate around 42.5 per cent.

However, out of that millionaire group, the data also show 73 paid no net tax in 2017-18.

For 54 of those millionaire earners, that was because they had enough deductions to lower their taxable income below the tax-free threshold of $18,200.

For whatever reason, one other million-dollar earner fell below the threshold but still paid $721 in tax that year.

A further 19 people who earned more than $1 million that year declared taxable incomes above the tax-free threshold but still managed to avoid paying tax, presumably due to various offsets and rebates.

The statistics suggest this is a generous group, at least in terms of donations and gifts that are tax deductible, which totalled just over $1.4 billion and made up almost three-quarters of the gap between total and taxable incomes.

Negative gearing property does not seem to be a strategy favoured by this ultra-high earning group, with net rental losses of just $121.3 million claimed between them, and a modest rental profit of almost $20 million reported overall.

Higher earning taxpayers paying zero net tax

Taxpayer total income Number of people who did not pay tax
$100,001 to $150,000 1,069
$150,001 to $180,000 262
$180,001 to $250,000 355
$250,001 to $500,000 308
$500,001 to $1m 100
$1m plus 73

The Australia Institute’s senior research fellow David Richardson said it wasn’t just millionaires getting away with tax minimisation.

The data also shows that more than 2,000 people earning between $100,000 and $1 million per year succeeded in paying no income tax.

“Australia’s tax system is shot full of expensive and inequitable loopholes,” Mr Richardson said.

“A key principle of a fair tax system is that people with similar incomes should pay similar amounts of tax, but in Australia that principle seems to have been completely abandoned.

“There are people on the minimum wage paying more tax than people with million-dollar incomes.”

Most landlords still happy to lose money

The average landlord reported just over $21,000 in rental income, with around $13,300 in interest payments, more than $3,400 in capital works and more than $10,100 in “other deductions”.

The median, or typical, landlord received less rental income but also had a much smaller loan and other expense claim.

Of the 1.3 million landlords reporting net losses, the average was $9,156 and the median was $5,670.

Part of the difference between the median and average reflects the fact that the median landlord only holds one investment property, while the average is skewed higher by those who own two or more.

Nowhere is the difference between the median, representing the typical person, and the average, skewed by the wealth, more apparent than in share investing.

Of the just over 2.8 million people who declared they had received franked dividends, the median payment was just $557, while the average was more than 15 times higher at $8,743.

Likewise for the tax credits associated with receiving franked dividends, which were typically worth $240, while the average was $3,634.

This distinction between the median and average sharpened further when it comes to capital gains, or the profits from selling investment assets.

Of the slightly more than three-quarters of a million taxpayers who reported a net capital gain in 2017-18, the median was just $2,290. The average was $30,794, meaning relatively few people made some very large gains.

This article was published by ABC News on the 18th of July 2020.

Want to find out how much your neighbours earn? Search for your postcode in the ATO database provided by the ABC here.

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Michael Janda is the ABC's senior digital business reporter, and has been covering business for ABC News Online since 2009. He was the ABC's first Business and Finance Cadet in 2008, and has since worked reporting finance and economics across online, radio and TV. You can follow Michael on Twitter: @mikejanda

Nassim Khadem is an award-winning journalist, reporting on business news across online, radio and TV for the ABC. Nassim began working as a journalist with The Age in 2003, including as that newspaper's economics correspondent. Before joining the ABC, she worked in various business reporting/editing roles for Fairfax Media's BRW magazine, The Australian Financial Review and as deputy business editor for The Age and The Sydney Morning Herald. You can follow Nassim on Twitter: @NassimKhadem

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