Capital gains for the rich and persistent gender pay gaps: what we can learn from the ATO's annual tax statistics

The Guardian

a day ago

On Friday, the ATO released the annual taxation statistics. These provide the data on everyone's 2022-23 tax returns.
If you love spreadsheets, you'll love this release – one of them has 167 columns of data on everything from how many people earned 'less than $0' (110,372) to how many of those who earned more than $1m had a Hecs debt (73). It also revealed that 91 millionaires paid no tax because they were able to reduce their 'taxable' income to below the tax-free threshold.
But as most of you are sensible and do not love spreadsheets, let me dive into them and tell you what you need to know.
One of the problems for those wishing to negative gear is that record low interest rates make this rather difficult (this might have broken the record for 'most Australian-first-world problem ever written').
This was the case in 2020-21 and 2021-22 when the cash rate hit 0.1%, and for the first time since John Howard introduced the 50% capital gains tax discount, the number of rental profits exceeded rental losses. But in 2022-23 interest rates rose significantly, and as a result the rental loss numbers also rose (and profits fell):
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Given the lag of rate rises and because some investors might have been able to fix their rates for a period, I suspect this time next year the number of rental losses will rise even more.
I have long joked that if you were an enterprising real estate agent, you could do a lot worse than set up camp wherever anaesthetists and surgeons were holding conferences, given they are always the most likely occupations to negative gear. And so it remains – 25.5% of surgeons negatively geared a property, while 24.9% of anaesthetists did as well.
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There has been a lot of talk this year about capital gains due to the changes to the superannuation tax concessions taxing unrealised capital gains – ie the value of assets held by a person in their super funds – of earnings in balances over $3m.
But for most of us capital gains are a non-entity – most of us earn our income from our salary or wages and we get taxed at the income tax rate. Capital gains however get a 50% discount if you have owned the asset for more than a year.
If that feels like a rort, well, welcome to Australia's tax system.
Ninety per cent of Australians earned less than $150,000 in total income in 2022-23. That 90% earn about 72% of all the wages and salaries in Australia, but they earn just 19% of all the capital gains in Australia.
By contrast, the 24,350 people who earned more than $1m a year make up just 0.2% of all individuals in the tax system, but earned 46% of all the capital gains in Australia:
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And when you compare the average wages and capital gains by total income range, it's pretty clear than the very rich get most of their income from capital gains rather than wages (as well as dividends and franking credits that come from owning shares):
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Speaking of tax dodges, the tax stats also give us the latest figures for median superannuation balance by age and gender.
In 2022-23, the median superannuation balance for women in their early 60s was just $153,685, while for men it was $205,385.
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At this point we should note that the ASFA recommends a single person having $595,000 in super to have a 'comfortable retirement'. This means more than half of people nearing retirement have only around a third of money in their super to be able to retire comfortably.
ASFA also suggests that for a 32-year-old to be able to have a comfortable retirement they should now have $83,000 in their super. The median balance however for people ages 30-34 is just $38,525.
It really is getting a bit silly trying to argue against the changes to the tax concessions of superannuation balances above $3m:
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The ATO rather wonderfully breaks down the incomes of all Australians into percentiles – to let you know where you sit among the rest of all the income earners in Australia.
Women are very much overrepresented in the bottom half of the income scale. There are 3.52 million women in the bottom income half, but just 2.8 million men.
By contrast, at the very top 1% there are 35,315 women compared with 91,160 men.
The median earnings is about $70,000. Earning more than $150,000 puts you in the top 10% – and 70% of those are men:
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Whenever we hear talk about the gender pay gap it is in either hourly or weekly terms. But this hides how many hours (or days) people actually work. If a man and woman are both earning $50 an hour, but the man gets 40 hours a week, while the woman only gets 20 hours, are we really going to say there is no gender pay gap?
The ATO tax stats show all – because it records how much you earn in a year, which is pretty crucial given you have to pay bills all year round, not just the weeks you earn money.
And once again the difference is stark.
Take for example the most male- and female-dominated occupations, plumbers and midwives:
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But perhaps we should not be too shocked that men are paid more on average in the most female-dominated occupation, because in almost all jobs men earn more:
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While it might be easy to suggest that this is just the way it is, a couple of examples show how things can change.
Since 2016 both women's cricket and football (across all codes) has gained much greater visibility and support, and it is clearly present in the gender pay gap. In 2016-17, women made up just 3.3% of the 2,911 people who listed 'footballer' as their main occupation; in 2022-23 it was 18% – from 96 women to 537. Similarly, women now make up 36% of the 403 professional cricketers in Australia.
And while men still get paid much more than women, the closing of the gap is quite stark – and something unfathomable a decade ago.
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It's worth remembering that gender pay gaps – just as how incomes and wealth are taxed – are not set in stone, and things can always be made more fair.
Greg Jericho is a Guardian columnist and policy director at the Centre for Future Work