2011-10-12

Personal Tax Australia vs Taiwan

I've heard many people say the Australia tax rate is much more than that of Taiwan so here are some data. The individual income tax rates for Australia for 2010-2012 are:

  • <= AUD$6K -- 0%
  • ($6K, $37K] -- 15%
  • ($37K, $80K] -- 30%
  • ($80K, $180K] -- 37%
  • > $180K -- 45%

The individual income tax rates for Taiwan for 2010-2011 are:

  • <=NT$500K -- 5%
  • ($500K, $1130K] -- 12%
  • ($1130K, $2260K] -- 20%
  • ($2260K, $4230K] -- 30%
  • > $4230K -- 40%
Assuming 30:1 exchange ratio and no deductions the effective tax rates are charted as above. We see for people earning "good" income (50K~150K) the difference can approach 7% but for high income people of 180K the difference is reduced to 4.7%.

It's noteworthy that Taiwan has various deductions, some of which favors the lower income bracket. One big deduction I miss is home mortgage interest deduction (limit NT$300K) since Australia has a very high mortgage rate (~7% compared to ~2% in Taiwan).

One surprising thing I found is that the fiscal year is different across countries. Taiwan has the simple January-December financial year while Australia's is July-June. It would be much simpler if every country can have the same fiscal year (ideally same as calendar year?), especially for people with income across countries like me.

Since my primary income has moved to Australia but still needs to pay Taiwan tax as citizen, it turns out it's better to earn 4.5% fixed deposit interest in Taiwan than the 6.51% savings interest in Australia as of the next Taiwan fiscal year. Complicated. ^^||
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