The function is inflexible by design.
It is designed to return the correct tax payable in a year, not to model the tax payable
under different tax settings. (Use model_income_tax
for that purpose.)
The function aims to produce the personal income tax payable for the inputs given
in the tax year fy.year
. The function is specified to produce the most accurate
calculation of personal income tax given the variables in the ATO's 2% sample files.
However, many components are absent from these files, while other components could
not be computed reliably.
For the 2018-19 tax year, the function calculates
- tax on ordinary taxable income
The tax as specified in Schedule 7 of the
Income Tax Rates Act 1986 (Cth).
- Medicare levy
See medicare_levy
for details.
- LITO
See lito
for details.
- SAPTO
See sapto
. For years preceding the introduction of SAPTO,
the maximum offset is assumed to apply to those above age 65 (since the sample files only provide 5-year
age groups).
- SBTO
See small_business_tax_offset
for details.
- Historical levies
The flood levy and the temporary budget repair levy.
Notably, when used with a 2% sample file, the function will not be able to correctly account
for different tax rates and offsets among taxpayers with dependants since the sample files
(as of 2015-16) do not have this information.