Retiring in Australia
Australia: the tax picture for FIRE
Australia taxes residents on a progressive scale: nothing on the first A$18,200, then 16% to A$45,000, 30% to A$135,000, 37% to A$190,000 and 45% above that. The 16% band is legislated to fall to 15% from July 2026 and 14% from July 2027; these figures hold the pre-step 16%. The 2% Medicare levy sits outside the bands, so true effective rates run about two points higher. There is no separate capital-gains schedule: for assets held over 12 months, half the gain counts as income at your marginal rate — roughly 8% to 22.5% effective — and the 50% discount is legislated to end on 1 July 2027.
At death there is no estate or inheritance tax — a cost-base rollover defers CGT to the beneficiary instead, and super death benefits to non-tax-dependants are taxed at around 15%. Superannuation drawdowns from age 60 out of a taxed fund are generally tax-free, which these bands don't capture. The cost-of-living factor of 1.02 carries low confidence. This is a medium-confidence draft covering the resident scale only, with no UK-pension treaty position coded yet.
Income tax (2026)medium confidence
| Band | Rate |
|---|---|
| A$0 – A$18,200 | 0% |
| A$18,200 – A$45,000 | 15% |
| A$45,000 – A$135,000 | 30% |
| A$135,000 – A$190,000 | 37% |
| above A$190,000 | 45% |
What this model doesn’t capture (10)
- 2% Medicare levy (flat levy on taxable income, with a low-income shade-in range) not modelled — a resident's true effective rate is ~2pp higher than these bands imply
- Medicare Levy Surcharge (1%-1.5% extra for high earners without private hospital cover) not modelled
- Low Income Tax Offset (LITO, up to A$700, tapering) not modelled — this reduces tax at the bottom, so the pack slightly OVER-states tax for low incomes
- no separate CGT schedule — for 2026-27 AU taxes capital gains at marginal rates with a 50% discount for assets held >12 months (handled in CgtRates, not here); for gains arising after 1 Jul 2027 the 50% discount is replaced by CPI cost-base indexation plus a 30% minimum tax on real gains (Treasury Laws Amendment (Tax Reform No. 1) Act 2026 Sch 1; Income Tax Rates Act 1986 s 12AA), with an election to keep the 50% discount for new builds — none of which is modelled here or in cgtByCountry.ts
- superannuation pension/lump-sum drawdowns for those aged 60+ from a taxed fund are generally TAX-FREE and are NOT represented by these bands (see notes — material for retirees)
- resident vs non-resident scale: non-residents have NO tax-free threshold and a different scale — for the 2024-25 year of income and later, 30% on ordinary taxable income to A$135,000, 37% to A$190,000 and 45% above (Income Tax Rates Act 1986 Sch 7 Pt II, which sets the first two rows by cross-reference to the second and third resident personal tax rates, so they track the resident scale); the 32.5% first band last applied for 2023-24 — only the RESIDENT scale is encoded
- bracket indexing: Australia does not index brackets — the 16% rate stepped down to 15% for 2026-27 and is legislated to fall to 14% for 2027-28 and later years (Income Tax Rates Act 1986 Sch 7 Pt I holds all three tables); this pack holds the FY2026-27 15% rate. From the 2027-28 income year a non-refundable Working Australians Tax Offset also applies — the lesser of A$250 and the tax on the taxpayer's net labour income (ITAA 1997 Subdiv 61-E, inserted by Treasury Laws Amendment (Tax Reform No. 1) Act 2026 Sch 3) — and is not modelled
- franking (imputation) credits not modelled — the 30%/25% company tax pre-paid on fully-franked dividends is creditable and excess credits are refundable in cash (unchanged 2026), so this pack OVER-taxes Australian franked dividend income, possibly heavily
- selfEmployment: no regime module — self-employed social contributions / business-income surcharges for this jurisdiction are not modelled
- standard deduction for work-related expenses (ITAA 1997 s 25-130, inserted by Treasury Laws Amendment (Tax Reform No. 1) Act 2026 (No. 49, 2026) Sch 4, applying to assessments for the 2026-27 income year and later) not modelled — an Australian resident who derives assessable labour income may deduct up to A$1,000 without substantiation, reduced by any work-related deductions actually claimed, so for such a user this pack OVER-states tax by roughly A$150 (15% band) to A$450 (45% band) per year; the deduction is confined to labour income and does not reach pension, rental, dividend or capital income
Capital gainsmedium confidence
50% of a realised gain counts as income and is taxed at your marginal income-tax rate.
Gains on >12-month holdings: 50% CGT discount then marginal rates (long holdings assumed — the FIRE case; <12mo pays full marginal). Shown basic/higher rates are ESTIMATE bounds: bottom/top marginal × 50%; plans stack the included gain on the year's actual income. Market-value cost base on becoming resident (ITAA97 s.855-45, non-TAP assets; temporary-visa arrivals rebase only when temporary status ends, s.768-950/955). ⚠ The 50% discount is legislated to END 1 Jul 2027, replaced by CPI cost-base indexation + a 30% minimum tax on real gains (not simply abolished); Age-Pension/means-tested-support recipients and new housing are exempt from the 30% floor — re-verify closer to the date.
Inheritance & estate taxhigh confidence
No inheritance or estate tax on death transfers.
No estate or inheritance tax (federal duties abolished 1979; state death duties gone by the early 1980s). The death-time concern is CGT, not estate tax: death is generally not a taxing point (ITAA 1997 s 128-10), with one statutory exception — CGT event K3, s 104-215 — ITAA 1997 s 128-10 disregards any capital gain or loss on assets owned just before death, and s 128-15 passes each asset to the legal personal representative or beneficiary — at the deceased's cost base for assets acquired on or after 20 September 1985 (item 1), but at MARKET VALUE at the date of death for pre-CGT assets (item 4), for a main-residence dwelling not then producing assessable income where the deceased was not an excluded foreign resident (item 3), for the non-taxable-Australian-property assets of a deceased who was a foreign resident (item 3A), and for assets passing to a special disability trust (item 3B) — deferring CGT to the beneficiary's later disposal. Superannuation death benefits to non-dependants are taxed — up to 15% on the element taxed in the fund and up to 30% on the element untaxed in the fund, plus Medicare levy when paid direct to an individual (ITAA 1997 s 302-145) — a super/income-tax rule, not estate tax.
When should you claim your Australia state pension?medium confidence
Australia Age Pension
Normal pension age 67. There is no actuarial claiming-age lever — the amount doesn't change with when you claim.
No claiming-age lever: the Age Pension is means-tested (income + assets tests) and the Pension Bonus Scheme (a deferral incentive) closed to new entrants in 2014.
The best age to claim isn’t just about these factors — it depends on your life expectancy, your other income, and which country you’re tax-resident in when the money lands. Deferring into a lower-tax country can flip the answer entirely. Optimise your claim age →
Cost of living
102%
of a UK baseline (100%) — a rough, illustrative comparison, not a forecast.
UK private pension
Under the UK treaty, a UK-sourced private pension paid to a resident here is generally taxed only where you live (not by the UK).
Common questions
How are capital gains taxed in Australia?
There is no separate CGT rate: for assets held over 12 months, 50% of the gain counts as taxable income at your marginal rate — an effective span of roughly 8% to 22.5% depending on your bracket — while holdings under 12 months are taxed on the full gain. New residents generally get a market-value cost base on assets other than taxable Australian property when they become resident, though temporary-visa arrivals only rebase when that status ends. The 50% discount is legislated to end on 1 July 2027 and the source data flags this for re-verification; the modelling carries medium confidence.
Is there inheritance tax in Australia?
No — Australia has no estate or inheritance tax; federal death duties were abolished in 1979 and state duties were gone by the early 1980s. The real death-time issue is capital gains: death itself is not a CGT event, but the deceased's cost base rolls over to the beneficiary (post-1985 assets) or steps up to market value (pre-1985), deferring the tax to a later disposal. Separately, superannuation death benefits paid to non-tax-dependants are taxed at around 15% plus the Medicare levy.
Do I pay tax on superannuation drawdowns in retirement in Australia?
Pension and lump-sum drawdowns from a taxed super fund are generally tax-free from age 60 — the income-tax bands above do not apply to them, which is material for retirees. The modelled bands cover the ordinary resident scale only and leave out the 2% Medicare levy, the Medicare Levy Surcharge for high earners without private hospital cover, and the Low Income Tax Offset. That means the pack slightly over-states tax at low incomes and under-states most residents' true effective rate by roughly two percentage points.
What does Australia do to your FIRE date?
The free calculator compares your number across every covered country; the full planner models your actual accounts, pensions, residency moves and these exact tax rules — with the maths behind every figure shown.