31 December, 2010

Death and Taxes... Mostly Taxes

We are a little nervous about the regular tax rates on income in Australia.  The base tax rate for my income bracket is 40%.  YIKES!

With that big of a chunk removed, there's no way we can afford to live there.  But, rest assured, dear reader - there are tax credit for children.  And do we have a bus load of tax credits.

It turns out that, with our minions and Erika not planning on working, we effectively cut our tax rate from 40% to 19%.  I figured this out using a calculator on one of the Australian Government web sites.  The scheme is complicated, there baing a Part A and Part B tax credit for kids.  I couldn't figure it out from the wording of the law (go figure, their tax code is as hard to read as the US tax code), but they had a helpful tax calculator.
One of the things that I'm going to have to get used to is the word "fortnight".  A fortnight here is when you build a castle with pillows and blankets in the play room and spend the evening in it.  (Fort Night)  The government of Australia is fond of using it as the term for a two week period.  So, that's about 2/3 of a score of days.

The web site calculates our income for a fortnight and then calculates child "payments".  I would think a credit would be easier to deal with, and perhaps that's what they mean.  The web site, however, uses the term payments, so I don't know if you get a check issued weekly or if it is simply an offset to your income taxes.  I do know that you can receive it every fortnight (see, getting the hang of that) or as a lump sum at the end of the year.

I think that for our first year down there, we may need to hire a "tax expert".  I hope that have TurboTax AU.

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