The primary difference is that non-residents are not entitled to the tax free threshold or the lowest income tax bracket.
For an individual who is a resident, there is a sliding scale of tax on income. Each income bracket is taxed at a set rate and the medicare levy is applied to the amount of income as a whole, where it is relevant.
The income tax rates for Australian residents for the 2015/16 income year are shown in the following table:
|Taxable income||Tax on this income|
|0 – $18,200||Nil|
|$18,201 – $37,000||19c for each $1 over $18,200|
|$37,001 – $80,000||$3,572 plus 32.5c for each $1 over $37,000|
|$80,001 – $180,000||$17,547 plus 37c for each $1 over $80,000|
|$180,001 and over||$54,547 plus 45c for each $1 over $180,000|
These rates do not include the medicare levy of 2% or the temporary Budget Repair Levy; this levy is payable at a rate of 2% for taxable incomes over $180,000.
It is important to know that in the case of wages paid, where Pay As You Go Withholding (PAYGW) is applied, the ATO release withholding schedules each year so the payer knows how much PAYGW to withhold. This means the payer can simply look up the table and withhold the amount as calculated by the ATO, and they do not have to monitor the wages paid on a week to week basis and work out when the payee moves between income brackets.
I hope this helps clarify the situation for you…