The group of Australians being smashed by the biggest tax rise in the WORLD – but here’s how you can beat the taxman

Working Australians have been crushed by the biggest tax increases in the world’s richest countries after Labor allowed key cost-of-living tax cuts to expire.

Australia’s average tax rate rose by 7.6 percent in 2023, the largest increase of all 38 countries in the Organization for Economic Co-operation and Development (OECD).

The tax increase saw the average Australian childless taxpayer hand over $24,791 in income tax to the government.

Personal income taxes now make up 45 percent of Australian government revenue, while record high immigration means more people of working age are paying taxes.

The OECD found that, overall, Australians are now the fourth most highly taxed population of all its members.

The heavy tax burden followed the end of low- and middle-income tax offsets in June 2022, providing relief of as much as $1,500 to 10 million workers earning up to $126,000.

Mathias Cormann, secretary general of the OECD, was the Liberal finance minister in Malcolm Turnbull’s government when the low- and middle-income tax was introduced in 2018.

In his final budget, former Liberal Treasurer Josh Frydenberg announced a one-off cost of living relief of $420 in March 2022, on top of the existing low and middle income tax offset of $1,080.

But the total compensation of $1,500 expired in June 2022, shortly after former Prime Minister Scott Morrison lost the election to Labor leader Anthony Albanese.

Treasurer Jim Chalmers declined to extend the Coalition’s compensation, which was due to expire over inflation fears – and this was before the consumer price index hit a 32-year high of 7.8 percent.

Australia’s 7.6 percent personal tax increase in 2023 was much higher than New Zealand’s 4.5 percent under former Labor Prime Minister Jacinda Ardern and was even higher than Luxembourg’s 5 percent increase.

The Australian government relies mainly on taxing employees. New data from the Australian Bureau of Statistics this week shows $278.39 billion has been collected from personal income tax.

This accounted for 45 percent of the Commonwealth’s $618.227 billion in revenue for the 2022-2023 period.

The Paris-based OECD announced on Thursday evening that Australia’s average tax rate would rise 7.6 per cent in 2023 amid a cost-of-living crisis (pictured is Gold Coast plasterer Suraya Kastelein)

With 24.9 percent of gross wages going to income taxes, Australia trailed only Denmark (36 percent), Iceland (27.3 percent) and Belgium (26 percent), and well above the OECD average of just 15.4 per cent.

The revised phase three tax cuts in July 2024 will provide struggling Australians with the first meaningful tax relief in two years.

But until then, tax agent H&R Block has revealed the little-known items that can be reclaimed from tax, from a dog to a caravan.

Declaring a dog or caravan for tax purposes

H&R Block tax communications director Mark Chapman said a farmer who uses a dog to herd sheep and a business that needs security can claim the animal as a tax deduction.

“In very limited circumstances you may be able to claim a deduction for your dog, both for the purchase cost of the animal,” he told Daily Mail Australia.

‘The costs are amortized over several years and the costs of keeping them: food, vet bills.

‘The two most common scenarios where the cost of a dog is tax deductible are agriculture, where an animal may be used, for example, to herd sheep, and security, where the cost of a guard dog to patrol business premises may be acceptable .’

Someone who traveled a lot for work could also claim a caravan if it was used as a place of residence during business trips.

H&R Block tax communications director Mark Chapman said a farmer who uses a dog to herd sheep and a business that needs security can claim the animal as a tax deduction (pictured is a kelpie working at Langawirra station north of Broken Hill)

“A taxpayer who traveled extensively for work decided to buy a caravan to stay overnight while he was at work, rather than paying for a hotel room every night,” Chapman said.

“That was deductible.”

But those claiming caravans had to ensure holidays were not claimed.

“You have to divide the deduction between work use and private use,” he says.