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Thursday
Mar282013

Equivalised Income: How do you compare to other Australians?

Per Capita recently released their latest report into public attitudes toward taxation and government expenditure. Between this and the federal government’s contemplation of increasing superannuation tax rates for high earners, there’s been another round of discussion about incomes and who is “rich”. One of the aspects that, as always, struck me was the disconnection between how well off people are and how well off they think they are.

The ABS publishes data on household incomes, both gross (pre-tax) and equivalised disposable. I’ve pulled this data together so you can see where your weekly (household!) income falls relative to other Australian households. I guess it’s then up to you to decide how many people you want to be earning more than before you consider yourself “rich” (or high income, at least).

Gross income is perhaps easiest to measure, but equivalised disposable income is a better metric for a range of reasons. The main ones are that it takes into account that living with other people is cheaper than living alone (because e.g. you get to share appliances, rooms, etc.) and adjust for tax so you’re looking at what you actually have to spend.

Disposable income is your gross income less tax and Medicare; gross = pre-tax, disposable = post-tax. (Don’t know your post-tax income? Try the ATO tax calculator.) To equivalise your income, I’ve made this calculator for you; enter numbers for your household into the yellow boxes, and hey presto!

This calculator uses the ‘modified OECD’ equivalence scale.

Now, look up your weekly income on the table below.

Equivalent Disposable Weekly Household Income, Cumulative Percentage, based on ABS 6523.0 Table 2A 2009-10

The equivalent figures for gross household income look like this:

Gross Weekly Household Income, Cumulative Percentage, based on ABS 6523.0 Table 2A 2009-10

These data are nationwide, but you can dive into state-specific or capital-city/rural data via the above links if you prefer.

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Reader Comments (4)

Hi Martin,

very interesting & timely piece. In your calculator above - the field "What is the total income?" - Is that _disposable_ or gross income?

Phil

April 4, 2013 | Unregistered CommenterPhil

Hi Phil,

What income you enter is up to you: the calculator simply equivalises it. Whether you enter gross or disposable income, though, be sure to refer to the correct table afterward.

Hope that's clear,
Martin

April 4, 2013 | Registered CommenterMCJ

Should the income amount entered be before or after centrelink benefits?

October 13, 2014 | Unregistered Commenterkez

Kez,
Use income after benefits.

October 14, 2014 | Registered CommenterMCJ

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