Income tax in Australia is the most important revenue stream within the Australian taxation system.

Income tax is levied upon 3 sources of income for individual taxpayers: personal earnings (such as salary and wages), business income and capital gains. Collectively these three sources of income tax account for 66% of federal government revenue and 57% of total revenue across the three tiers of government.^{[citation needed]}

Income received by individuals is taxed at progressive rates, while income derived by companies is taxed at a flat rate of 30%. Generally, capital gains are only subject to tax at the time the gain is realised. Income tax is collected by the Australian Taxation Office for the Government of Australia.

In Australia the financial year runs from 1 July to 30 June of the following year.

Income tax is applied to the taxable income of a taxable entity. Taxable income is calculated, in a broad sense, by applying allowable deductions against the income of a taxable entity.

Income tax on personal income is a progressive tax. The current tax-free threshold is $6,000, and the highest marginal rate for individuals is 45%. In addition, most Australians are liable to pay the Medicare levy, of which the standard is 1.5% of taxable income. On 10 July 2011, the Gillard Government announced that it would increase the tax-free threshold to $18,200 on 1 July 2012 as part of the Clean Energy Future package, while reducing the Low Income Tax Offset to $300.

Australia ( /əˈstreɪljə/), officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent as well as the island of Tasmania and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area. Neighbouring countries include Indonesia, East Timor and Papua New Guinea to the north; the Solomon Islands, Vanuatu and New Caledonia to the north-east; and New Zealand to the south-east.

For at least 40,000 years before European settlement in the late 18th century, Australia was inhabited by indigenous Australians, who belonged to one or more of roughly 250 language groups. After discovery by Dutch explorers in 1606, Australia's eastern half was claimed by Great Britain in 1770 and settled through penal transportation to the colony of New South Wales from 26 January 1788. The population grew steadily in subsequent decades; the continent was explored and an additional five self-governing Crown Colonies were established.

An income tax is a tax levied on the income of individuals or businesses (corporations or other legal entities). Various income tax systems exist, with varying degrees of tax incidence. Income taxation can be progressive, proportional, or regressive. When the tax is levied on the income of companies, it is often called a corporate tax, corporate income tax, or profit tax. Individual income taxes often tax the total income of the individual (with some deductions permitted), while corporate income taxes often tax net income (the difference between gross receipts, expenses, and additional write-offs). Various systems define income differently, and often allow notional reductions of income (such as a reduction based on number of children supported).

The "tax net" refers to the types of payment that are taxed, which included personal earnings (wages), capital gains, and business income. The rates for different types of income may vary and some may not be taxed at all. Capital gains may be taxed when realized (e.g. when shares are sold) or when incurred (e.g. when shares appreciate in value). Business income may only be taxed if it is significant or based on the manner in which it is paid. Some types of income, such as interest on bank savings, may be considered as personal earnings (similar to wages) or as a realized property gain (similar to selling shares). In some tax systems, personal earnings may be strictly defined where labor, skill, or investment is required (e.g. wages); in others, they may be defined broadly to include windfalls (e.g. gambling wins).