With the recent inflation driven surge in the cost of living, apparent increase in crime and seemingly constant complaints about the education and health systems, some New Zealanders are considering packing up and moving to Australia. But is the grass really greener – at least from a tax perspective?
Firstly, unlike New Zealand, Australia has a capital gains tax (CGT). The amount payable is tied to the taxpayer’s respective tax rate, and a person’s main residence should not be subject to CGT on sale. A 50% CGT discount is available where an Australian tax resident or Australian Trust has owned the asset for at least 12 months prior to selling. Companies do not qualify for the discount.
Another tax imposed on property in Australia is stamp duty. This is a tax that is imposed when buying land (as well as other specific transactions). The amount of stamp duty varies by state and is imposed on top of a property’s purchase price. A $500,000 residential home in Queensland will trigger stamp duty of around AUD$16,000. For the same-priced home in Victoria, you’re looking at around AUD$25,000.
Like New Zealand, Australia also has a progressive tax rate system for individuals. The below table compares the two countries’ tax rates for individuals.
| New Zealand (NZD) | Australia (AUD)* | ||
| $0 – $14,000 | 10.5% | $0 – $18,200 | 0% |
| $14,000 – $48,000 | 17.5% | $18,200 – $45,000 | 19% |
| $48,000 – $70,000 | 30% | $45,000 – $120,000 | 32.5% |
| $70,000 – $180,000 | 33% | $120,000 – $180,000 | 37% |
| >$180,000 | 39% | >$180,000 | 45% |
| *Australian tax rates exclude the 2% Medicare levy, which applies to most residents. | |||
Although the highest personal marginal tax rate in Australia of 45% seems daunting, when comparing tax paid by low-middle income earners in each country, the results are surprising. The below table
compares the amount of tax payable in each country (excluding Australia’s 2% Medicare levy) if an individual earned the level of income in the first column (in the respective country’s currency).
| Annual income | Tax on income in NZ | Tax on income in Australia |
| $40,000 | $6,020 | $4,142 |
| $80,000 | $17,320 | $16,467 |
| $120,000 | $30,520 | $29,467 |
| $200,000 | $50,320 | $60,667 |
At one end of the spectrum, the tax-free threshold skews the comparison for lower income earners, and the top rate of 45% skews the cost at the other end of the spectrum. But given such a small difference exists for the average salary/wage earner, it would be reasonable to assume a person’s tax bill in Australia will be higher as soon as stamp duty and CGT is incurred – but maybe you get what you pay for.
