The Australia Tax Office (ATO) has released a list of the 10 highest paid jobs in Australia. They are ranked by taxable income.
Strange, then, that those who appear in the regular rich lists published by the Financial Review and others don’t appear on the ATO list.
Medical practitioners take five of the top 6 spots, but this isn’t solely due to the high salaries on offer in their field. It’s got more to do with the fact that they don’t pay high sums for “tax avoidance” schemes.
The listed medical professions such as surgeons, anaesthetists and psychiatrists have little to no leeway in manoeuvring their tax returns as Australia’s medical system makes all their sources of income extremely traceable.
This means their reported taxable incomes are more or less a true representation of their income, whereas for CEOs who sit in 9th place on the list or for jobs missing from the list such as property developers, entertainers and entrepreneurs, what they report may be a little more “engineered”.
Essentially, while those on the top of these lists are still extremely wealthy, the truly rich have tax advisers good enough to keep their pockets full and their professions well away from lists like these.
In the ATO report, there are 42 people who have earned an income of more than $1 million a year and still claimed a taxable income that requires less than $6000 worth of tax payments. This equates to the income tax that someone who earns approximately $45,000 would pay.
Whereas if a surgeon was earning $1 million, they’d have no way around paying the full rate of approximately $420,000 in tax.
Last year the ATO data showed that super rich (categorised as $250,000,000 income per year or more) Australians and their businesses were paying about $960 million less in tax than they should be. Furthermore, there were 66 millionaires who did not pay a single cent of tax in 2018-19.
The Australian uses a simple comparison of house prices versus taxable income to demonstrate a clear discrepancy between what’s being reported and what people are really earning. For example, the wealthy suburb Middle Park in Melbourne has a median property price of $2.8 million, yet the average taxable income of a Middle Park resident is ‘just’ $142,000.
The recommended 20% deposit on a $2.8 million property is $560,000 and a taxable income of $142,000 will leave you with about $100,000 in real earnings. If an individual saved 20% of their real earnings every year it would take 28 years to save for a deposit, or 14 years for a couple.
Something isn’t quite adding up. And we are the losers.