This article explains the little understood concept of “bracket creep”. It recommends seeking professional guidance when it comes to finding an individual solution.
Australia has a progressive income tax system. This simply means that higher income earners pay a greater proportion of their income in tax than low-income earners. It is achieved by applying a different rate of tax to each income band or “bracket”.
For example, if you earn $25,000 per annum you’ll pay $1,330 in tax, or 5.3% of your total taxable income. Earn $80,000, however, and your tax bill jumps to $17,547, or 21.9% of your taxable income.
Where it becomes creepy...
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