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BBQ Talk 5

There is no point earning more money via a pay rise, doing overtime or having a second job because you just lose all the money in tax!!

ANSWER

It is true that we do have a tiered tax system which taxes people more in bands as they earn more money. There are always many debates about whether this is a fair system, but you still always benefit financially from earning more money.

The vast majority of Australian workers are in the 30% tax bracket – so yes for every extra dollar you earn you will probably have to pay the government 30c – but you then get to keep the remaining 70c.

Or to look at it another way, if your base wage is $50,000 you will pay $8547 in tax & Medicare, leaving you with $41,453 in your hand to spend. If, however, through doing overtime or having a second job you earn a further $15,000 – taking your total earnings to $65,000 you will pay $13,947 tax and Medicare – leaving you $51,053 in your hand to spend.

That extra $10,000 is real money that could make a real difference to your finances.

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