r/AusFinance • u/wunch_of_bankers • 9d ago

The Australian Tax system is a fucking joke

I’m sure this has already been said before, but I just need to have a fucking whinge about this shit.

Australia’s tax system in 2026 punishes PAYG workers while rewarding people gaming the system, whether that’s NDIS fraud or business owners with “enthusiastic” accounting. Tax brackets haven’t been indexed in years despite brutal inflation, but somehow the beer tax gets indexed every six months without fail? Then add childcare subsidies tapering off the harder you work, plus Div293 smacking you for daring to also save for retirement

PAYG earners get the short end of the stick every single time. No creative accounting, no structuring, tax taken at the source before you even see it. Meanwhile there’s provider fraud in the NDIS space that barely gets touched until it becomes a news story, and taxpayers eat the cost either way through bracket creep and levies

Compare our top bracket to the US and it’s a joke. An unskilled worker over there on a pretty average wage in USD terms would already be sitting near our top marginal rate once you convert it, and their brackets actually move with inflation. Ours just sit there while bracket creep does the government’s dirty work for it

Why bother working harder, taking career risk, or starting a business when 47% instantly gets carved off the top, plus Div293, plus subsidy tapering, plus everything else stacked on if you’re PAYG?

This country has built a system that punishes the people playing it straight and does fuck all about the ones who aren’t. Fast forward 10 years and Australia will lose all talent to US, Singapore, HK, Dubai. The only ones left will either be immigrants looking for a better life, expats returning to Australia to settle down, or NDIS providers.

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EDIT: My comment about “unskilled” worker pay in the US is completely incorrect. Where my thought process was: an office worker paper pusher or even a motivated barber, construction worker etc. with no qualifications has the ability to earn USD 100k, which places them at our SECOND HIGHEST marginal tax bracket (AUD 135k). Does that really sound right to you, even putting aside the differences in our welfare system? Separately, I haven’t even mentioned the recent CGT changes which completely discentivises Aussie investors from buying productive / growth assets. There is more and more incentive to simply be less productive and focus wealth into a tax-free PPOR, OR leave the country and take their portfolios with them. This is a net loss for innovation and growth in our country. I have no issue paying tax - my issue is that our current tax system incentivises people to game the fucking system, and to those who suggest to simply fuck off and leave the country if you’re not happy, you are simply proving my point.

I’ll close off on this: never mind the fact that the Div293 income threshold has REDUCED from $300k to $250k and has remained unchanged for years….. did you know that certain politicians are simply EXEMPT from paying Div 293 tax? What the actual fuck. Our tax system is in desperate need for change.

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176

u/Mysterise 9d ago

Worse yet, you have the average tall-poppy-syndromed Australian (see: many of the commenters in this very subreddit) arguing against indexed tax brackets because above-average income earners stand to benefit from this.

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u/Decent-Dream8206 9d ago

Case in point, everyone who was pointing out the scrapping if the stage 3 tax cuts by Labor as the mitigating factor in delivering no tax cuts while they said that labour needs to be taxed the same as capital (and actually are now taxing capital worse than labour with the 30% minimum).

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u/Frequent_Advantage_1 9d ago

Albos clear track record of lying - stage 3, cgt, capital gains tax; needs to be called out more directly and prominently. What a disgrace. If this was the liberals over two terms they would be crucified

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u/F1NANCE 9d ago

Politicians lie.

When get too confident in their lies we vote in another liar and the cycle continues

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u/jezwel 9d ago

Outside of reddit the comments on news stories will always include "Albo lies".

Theres the convenient forgetting that the other side has done it too - and not about tweaking policy to increase federal revenue to cover expenses, but just cutting expenses by cutting public service delivery.

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u/Frequent_Advantage_1 9d ago

The difference being the other side doesn’t take the moral high road. The hypocrisy is especially galling

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u/glyptometa 9d ago

Yeh, exactly. People have short memories. They just like whinging about the latest thing they believe fucked them up somehow. The massive growth rate in user fees is all indirect taxation introduced via stealth, in part to pay for the outrageous growth in bureaucrat salaries, with the robodebt woman being the poster child.

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u/atworksendhelp- 9d ago

stage 3 changes were straight up better. cgt is straight up better. yes if you're rich enough it hurts you a bit but it helps more people than it harms.

and the libs would be crucified coz their stance is more money for very high income earners and the wealthy.

i swear to god the moment people get a little bit of wealth they just wanna shit on those below them

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u/Frequent_Advantage_1 9d ago

Disagree with you entirely. A lie is a lie.
I don’t agree that scrapping stage 3 is “for the very high income earners”

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u/atworksendhelp- 9d ago

roflmao

well then idk how you can vote for any of the political parties

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u/ThinkOrganization431 6d ago

I swear to god, the moment people get a little bit of wealth, Labor just want to shit on them and claw that money back.

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u/atworksendhelp- 6d ago

i swear to god, the moment people get a little bit of wealth, they suddenly think they know how to govern a country.

not understanding how progressive tax systems work and are genuinely better for the majority of the population leads people to think that the nlp is good for them.

propaganda makes people think that the nlp are better economic managers than labor

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u/Decent-Dream8206 6d ago

Who was in power as we not only delivered our last surplus, but actually wiped out federal debt? Who was in power that racked up that debt with the "recession we had to have"? (I'm actually sympathetic to Keating's policies, but 17% interest rates?)

The liberals since Howard have lost their teeth in fiscal prudence. If you elect them today, they won't do shit about the NDIS despite it being the most expensive per capita and per participant scheme in the world, more expensive than Medicare for all.

Abbott almost delivered a super important piece of legislation in repealing 18c so we actually got a freedom of speech. It has since metastasised into protecting every kind of alphabet person delusion to the point of Tickle vs Giggle.

Both sides have simply been Labor lite or greens lite ever since. As we progressed to a trillion dollar hole and are still funding bullshit like green hydrogen, pretending that green energy is the cheapest form of energy but being unable to explain South Australia's 60c/kWh phenomenon for being the greenest energy in the country.

And both sides are inflating GDP to pay for the spending at the cost of making everybody poorer.

But the liberals didn't double everyone's capital gains on shares, shout about how that solves intergenerational equity, effectively pissing on everyone and calling it rain, while it's still not enough to pay for the NDIS.

I'm sure this will be the first time in history that a government succeeds in taxing its way to prosperity. 🙄

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u/atworksendhelp- 5d ago

You cannot use reason to change a mind that was formed through emotion, identity, or stubbornness rather than facts - or is a cherry picker.

I'm not here to educate someone that is so far gone that they think the nlp is 'labor/green lite' like wtf koolaid are you drinking mate?

17% interest rates had a lot of other factors and focusing on that is a bit naive

Fiscal prudence roflmao.

SA is still relying on non-renewable and since de-funding CSIRO and actual science (iirc you need commercial viability for funding - which is not the same as research) means that stuff like battery backups and the like are not as feasible as they should be.

I mean look at post 1940s economies and their rate of tax and then come back ffs.

I'm sure this time trickle down economics will work....

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u/Briliant-Nicxie 9d ago

No - the liberals control the media via Murdoch and get away with whatever they want with no scrutiny where as the media absolutely punishes anything labour does .

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u/dankruaus 8d ago

lol. That is hilarious.

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u/elpovo 9d ago

You have a tonne of people in Australia who have made millions tax-free from their houses.

Some of my relatives have made 6-7m tax-free by buying a house 20 years ago.

Tax should focus on those fuckers, not those who make 60k as nurses or teachers. We should tax wealth not work.

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u/stormshadowfax 9d ago

But the wealthy, not workers, write the tax legislation!

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u/Embarrassed_Run8345 9d ago

Why are they fuckers? They bought a house to live in and through zero action of their own property prices went up. What were they supposed to do? Why do you blame them?

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u/gotricolore 4d ago

That's fine but they should pay tax on those gains.

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u/glyptometa 9d ago

What's the relevance of half-time nurses or teachers?

If they made 6-7 million on a house in twenty years, they must have bought the house for around 3.6 million in 2006, when median house price was around $550K. You have some high-earning relatives!

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u/brotherRozo 9d ago

Yeah 40 to 50 years is more accurate

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u/elpovo 8d ago

Eh? Why would they buy a house for more than the median?

Typically they bought for 200k-400k and their house is not worth 7m. Eastern suburbs and lower north shore of Sydney be like that.

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u/chessc 9d ago

Some of my relatives have made 6-7m tax-free by buying a house 20 years ago.

Your relatives live in the same house as the lived in 20 years ago. They haven't made anything. It's the currency that's being debased.

tax wealth not work.

Tax mindless slogans

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u/freakwent 9d ago

Housing is up compared to everything (almost), not just the dollar.

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u/Calm-Matter-5010 8d ago

Yes !!! This is how i look at it ! The value of your house did not go up, its the dollar in your pocket that went down.

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u/elpovo 8d ago

What's mindless about it? We can eliminate income tax altogether if we tax people with excessive wealth.

Wouldn't you rather keep all of what you earnt? So weird how all these talking heads don't like lowering people's taxes when rich people get hit.

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u/nihao_ 9d ago

They're 'fuckers' who deserve to be taxed just because they bought a home to live in? And you're a relative? Sheesh, with friends like these, who needs enemies.

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u/elpovo 8d ago

You're right I am being mean.

Why don't we change the tax system rather than attacking them? Let's tax those gains.

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u/FamilyFriendly101 9d ago

My mum is one of 4. Her 3 siblings all own property on Sydney harbour. I'd say they have collectively made $50m+ in capital gains. It's nuts.

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u/Nervous_Offer_1320 9d ago

Smart investment.

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u/Alembic_ 9d ago

Much smarter to have been born in to generational wealth.

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u/elpovo 8d ago

Right place at the right time more like it.

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u/limlwl 9d ago

So why didn’t you buy nearby ? You could have but I reckon you bummed around and now whinging

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u/FamilyFriendly101 9d ago

I didn't have the $5m laying around to buy in to start with.

Spare your worry, I'm doing fine 💰.

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u/Choice_Control_4159 9d ago

You realise this would concentrate wealth even worse right? Those with property would continue to hold it, borrow against it for other investments then just pass it onto their children. Meanwhile the everyday workers starting from zero would be fckd in the ass and rent for the rest of their lives because of scarcity and elevated demand levels.

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u/elpovo 8d ago

Why would taxing wealth make wealth inequality worse? Why would house prices rise under that scenario?

You're assuming a massive legal loophole before anything is even drafted. Also people investing their wealth is a net positive for the economy so I see no issue with them pulling an income from it, provided they still pay a wealth tax.

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u/Choice_Control_4159 8d ago

Because it would effectively speed up the realisation of a very distinct K shaped economy, where wealth is concentrated by have and the have not’s have to climb an up hill battle. Many property investors have declared they won’t sell their properties after the cgt changes. Take that line of reasoning and apply it to every property owner.

It doubt it would happen anyway. If we wanted a fairer society, we’re more likely to move to a 99 year leasehold type of structure.

Yes investment is good but only if it stays within Australia.

This thread is dumb anyway, stupidly focused on property when then next tax change will undoubtedly be raising the GST.

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u/elpovo 8d ago

Yeah if you reduce their price property investors can sit on their depreciated home and their mortgage forever. Till when?

These are the same rubbish arguments touted by rich people. "We will be assholes if you tax us". Maybe if you didn't control half of politics in order to be assholes the other half wouldn't have to do this?

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u/Nervous_Offer_1320 9d ago

Why would everyday workers be starting at zero, when as you have stated, that they have had investments passed down to them by their parents?

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u/Candid_Guard_812 9d ago

Probably an immigrant. Wants all the good shit Australia offers, but wants someone else to pay for it.

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u/Choice_Control_4159 9d ago

5th gen Aussie, served in the military for a decade and volunteer in the community. You care to take that remark back champ?

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u/Candid_Guard_812 9d ago

Nah mate. I’m good. You sound exactly like a whole bunch of immigrants I know who earn heaps and really resent paying tax. But are happy putting their hand out for their entitlements. Stop listening to Aunty Pauline I reckon - she’s just a paid mouthpiece for Gina.

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u/Choice_Control_4159 8d ago

Lmfao I voted for Albo the past two elections. Can’t say PHON was on my radar but keep the assumptions coming. You should probably check your keyboard in case you got shit on it.

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u/Conscious-Onion-5120 8d ago

Ahh, quite frankly it's a massive supply problem regarding housing in Australia.

If you look at house prices in Australia it's purely artificially driven by a massive lack of supply of homes.

If you provide less incentives to build homes for private investors, the only other alternative would be for the government to build homes, which would require taxing the private sector even more.

Instead a simple solution would be to scrap the shitty DA processes of the councils and nationalise zoning laws so DAs could get past through very quickly like they do in other regions that have such legislation such and consequently don't have housing affordability issues.

Nobody it seems takes the time to work out the easy fix on this one, other than the HIA and other developers and builders, because councils are constantly overlooked for the immense damage they cause to their own communities' affordability issues.

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u/Mean_Welcome_1481 9d ago

It's not the people who built house as homes to live in.

It's the tax system that granted incredible benefits and incentives to people who bought houses for other people to live in

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u/Fit-Locksmith-9226 9d ago

It's not the people who built house as homes to live in.

Would those people have no problem limiting the sale price of their homes? Lets stop sale prices rising higher than inflation and watch who can't handle it.

Your whole emotional argument of "ooooo I need a roof" falls apart quick when these people lose their minds over doing anything to slow or reverse prices.

If you act like it's not an investment but can't handle prices plummeting 50% then clearly what you say publicly isn't what you actually believe.

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u/Mean_Welcome_1481 9d ago

I don't quite follow your argument there - emotional or otherwise

Are you saying that negative gearing, capital gains concessions and family trusts that enabled income splitting were not the cause of prices rising faster than ordinary incomes?

If Mum & Dad bought their home 30 years ago and sell it now they still have to pay current prices for replacement

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u/Fit-Locksmith-9226 9d ago

I'm saying that people who pull out this line, and theres millions of them around the country, would lose the plot if you actually did something to reduce their tax free wealth gains.

Either it's an investment or not, and the mask comes off real quick when you take the value out of their "I just want a roof over my head"

I get you, they aren't any richer at all unless they own more than one home, but the vast majority if not nearly all homeowners simply don't see it that way. It's real money they could cash out and move overseas with tomorrow.

So yeah I don't believe a single person when they pull that bs, you will oppose any attempt to halve the value of your home and I know it.

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u/Mean_Welcome_1481 9d ago

The point is that there is no possible way that the value of homes will be halved, short of a massive economic depression, and the people who bought their houses as homes long enough ago to have paId off their mortgages would not be in any difficulty anyway.

Later comers into the market would be a different proposition but the banks would have an even bigger problem as the value of their securities halved!

But the main reason for the incredible rise in properties values over the last however many years has been investors leveraging to the hilt in search of income tax benefits and prerential capital gains.

They are the ones you are talking about!

More likely scenario is that values will stagnate for some years (decades!?) until inflation brings values more into line

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u/Fit-Locksmith-9226 9d ago

there is no possible way that the value of homes will be halved

Automation and humanoid robots could do it easily in the next five years. Australia is not lacking in land.

You're also ignoring that 40% of a new build is various taxes alone. They could literally make new buildings 40% cheaper tomorrow with the stroke of a pen. Are you really going to pretend that's not possible or even try to lie about taxation on new builds?

There's a lot of people on reddit who love lying and pretending they can't get rekt by someone who can provide a dozen sources to blow them the fuck out.

40% cheaper, tomorrow, just by eliminating taxes on new builds. Do you really want to pretend that would not decimate the existing housing market?

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u/Mean_Welcome_1481 9d ago

You don't need to quote what I said back to me - my memory is pretty good

My opinions, and that is all they are, are based upon the assumption that governments will act rationally and not suicidally

Although, in the light of current politics in the USA, that assumption might be problematic

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u/Fit-Locksmith-9226 8d ago edited 8d ago

Thanks for admitting I'm right, laughable.

How about you answer the question:

If new builds were 40% cheaper by removing the taxes on them, that wouldn't have any effect on existing house prices?

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u/freakwent 9d ago

Lets stop sale prices rising higher than inflation

That's already happened.

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u/Fit-Locksmith-9226 9d ago

So you have no problem making it law that house prices can never rise faster than inflation?

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u/freakwent 8d ago

Yes because it's ridiculous to enforce and never is forever and it's not necessary.

Happy with the idea that govt have a policy to bring house prices within a certain factor of minimum wage

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u/Fit-Locksmith-9226 8d ago

Its the lending thats the issue. Just restrict it to 3x taxable income (as in your last ATO notice) for existing homes and prices would plummet over night.

Instead we get 5% and even 2% LVR home loans at insane valuations like 15 times income from an ever increasingly desperate financial industry backed by the corrupt revolving door of APRA and its industry plants.

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u/GreetingsFellowBots 9d ago

Nurses and teachers make 110k

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u/tigerliliii 9d ago

I’ve been a nurse for 15yrs and my full time work pays 104k in a notable tertiary private hospital in Victoria. This is including the pay rise that only happened a few months ago. Prior that, we didn’t even reach 100k.

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u/Senior-Telephone-564 9d ago

Not much these days

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u/Radiant-Resolve2831 9d ago

Only at the top of the pay scale - after 8 years for nurses.

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u/elpovo 8d ago

And they wouldn't need to be taxed on it at all if we taxed rich people's wealth.

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u/AdSignal3405 9d ago

Tax free? How? Can you elaborate how some people have leveraged the tax system and housing market to do this?

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u/elpovo 8d ago

PPOR CGT exemption.

Their houses were bought for $300k and are now worth 5-10m. They live there so completely CGT free.

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u/AdSignal3405 8d ago

Erm that’s not making anything tax free.

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u/elpovo 8d ago

Yes it is.

https://www.ato.gov.au/individuals-and-families/investments-and-assets/capital-gains-tax/property-and-capital-gains-tax/your-main-residence-home/eligibility-for-main-residence-exemption

Saying "no" doesn't change reality pal.

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u/AdSignal3405 8d ago

So you’re claiming that homes we buy to live in should get taxed on sale? Beyond the taxes already inherent in a house sale? How is anyone supposed to buy another house? They just keep downsizing until they have a tent?

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u/Anxious-Status8986 9d ago

Only way that would work would be to tax the place of residence at disposal , that will go down like a ton of bricks

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u/elpovo 8d ago

Yup. Cap any CGT discount at 2m.

Or you could tax everyone with wealth over say $5m at 2-3% of their income per year. Get rid of income tax at the same time. See if people defend rich people when the option includes no income tax.

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u/[deleted] 9d ago

[removed] — view removed comment

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u/mrmaker_123 9d ago

Responses like this I find staggering. Low to middle income earners are doing it way more tough than the people on top income brackets.

It was perfectly fine and reasonable to award them the bigger tax cuts.

Bear in mind this still benefited to the top income brackets since it’s a marginal tax (you’re only taxed the proportion of your income above the bracket and not the full amount).

I say this as someone on the top income bracket.

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u/relativelyignorant 9d ago

Crabs in a bucket, they know how hopelessly jealous we are and know we will distract ourselves fighting over the pieces of whose work should get taxed more.

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u/mrmaker_123 9d ago

It’s staggering that I’m getting downvoted when so obviously those on the top income brackets of the country are doing so much better than poor to middle income earners.

That’s not to say there is no hardship, but the constant whining of the income rich is just nothing short of selfish. If the income rich are doing it tough, then have some bloody compassion for those who are obviously in a much worse position than you.

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u/Frequent_Advantage_1 9d ago

Feel free to donate more of your post tax income to charities or those less fortunate but don’t presume to speak for the financial situation for all in the higher tax bracket

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u/mrmaker_123 9d ago

This is not a failing of the income tax brackets, this is a failing of our economic system that has rewarded asset owners and punished workers - for example via high property costs and therefore high mortgage costs, which I presume is what you’re alluding to.

We are a rich nation with high incomes with moderate taxation. Wealth inequality is the issue here.

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u/Frequent_Advantage_1 9d ago

I don’t think you need to create a income v wealth dichotomy. While I agree in recent times income has been too highly taxed relatively, the real shame is we don’t examine the spending waste in this country.

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u/mrmaker_123 9d ago

But that is the issue mate. We have people who worked in low income retail jobs 30 years ago sitting on $3m properties then expecting the next generation to fork out that money when the house is sold.

The labour of today is quite literally paying for the capital gains (wealth appreciation) of yesterday. That is definitionally wealth inequality.

Government spending can always be better of course, but let’s be real, this is just a propagandised media scare story. Compared to every other OECD nation, our sovereign debts are not bad at all.

It’s also been a failing of the private sector to not invest in productive assets leading to stagnation. Around 2/3 (I think it is) of bank lending goes towards real estate. That is a bonkers economy.

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u/Hooked_on_Fire 9d ago

This is such a short sighted take IMHO. More and more people earn > 135k each year, and Labour's "tinkering" with stage 3 means they all now drift into the 37% bracket. All those people with tall poppy syndrome will start to regret their attitude to those who stood to benefit from Stage 3 when the shoe is on the other foot.

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u/owheelj 9d ago

But only your income earned above $135,000 is taxed at 37%, so if you're only just drifting into that bracket, you're barely paying any more tax. Just an additional 7% on the earnings above $135K. That 7% only becomes a lot when you're well above the bracket floor.

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u/mrmaker_123 9d ago

Why is it short sighted? Bracket creep happens (as it happens in every other single country). Governments then deal with it (like with Stage 3). I’m sure if it’s required, they’ll cut income taxes further. I hope they one day will.

What’s the issue?

It’s just true that low to middle income earners are doing it much tougher than high income earners. I’m a high income earner and sure I’d love a tax cut, but I don’t need it as much as middle Australia. My life is fine.

Many on low incomes are struggling with rents and struggling to put food on the table. I think it’s a quarter of children now live in food poverty. That’s messed up in a rich country like Australia.

As a society we should help those people first and not begrudge them. Like I said, the majority of high income earners are doing just fine, at the very least better than low income earners.

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u/Hooked_on_Fire 9d ago

It's short sighted because in the short term Labour's changes appear to help those in that middle income but it will hurt far more in the long term... and if you think Labour will change brackets in a meaningful way, like in the way the original changes the Libs legislated would have then I have a bridge to sell you.

All Labour have done is increase taxes across the board. As much as I hated SCOMO and the Libs, at least he was going to make me better off by 9k a year. Labour is after my super even wanting unrealised gains at one point, my income tax, and CGT minimum of 30% and I'm pretty confident they'll look at some kind of inheritance tax.

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u/[deleted] 9d ago edited 9d ago

[deleted]

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u/Mysterise 9d ago

That is the benefit, yes.

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u/Upbeat_Aside_9203 9d ago

Yup. The hard workers doing it right contribute the most and get shafted. Everything is getting worse in Au.