Bracket creep sees income tax revenue surpass $329bn, ATO stats reveal

The ATO’s latest taxation statistics have revealed a steady increase in reliance on income tax over the years, with individual tax income up from 49.8 per cent of the tax mix in 2020–21 to 52.2 per cent of the government’s $630.9 bn in tax revenue for 2023–24.

ATO’s latest data echoes last year's, revealing the government has maintained a heavy dependence on income tax, having gradually increased in the tax mix over the years – every year since the ATO’s report for the 2021–22 report (49.8 per cent in 2020–21, 50.3 per cent in 2021–22, 51.6 per cent in 2022–23, and 52.2 per cent in 2023–24).

Boosting consumption taxes and cutting income tax were on the reform wishlist for the Commonwealth Bank, which last year said: “[the nation’s] tax base is too narrow and overly reliant on income tax receipts. Left unchanged, future generations will bear a growing tax burden in an ageing population with a growing dependency ratio.”

“Australia needs to find a way to lower its dependence on income taxes. We believe it should be possible to achieve a revenue neutral but more sustainable tax mix through a package of measures,” the bank said in a submission to the Productivity Commission mid-last year.

Additionally, in its Tax Policy Journal 2026, the Institute of Financial Professionals Australia (IFPA) said that the current narrow and inflexible revenue structure has resulted from a heavy reliance on personal income tax, reinforced by bracket creep, and political resistance to broadening the tax base.

IPA senior tax adviser Tony Greco said high personal income tax rates signal an outdated tax system.

"The proposed changes do little to address the structural changes required to reduce costly over–reliance on income taxes," he said.

The 2023–24 ATO data also revealed that the total industry tax liability was led by companies in the mining sector (~$47,291,000) and financial and insurance services, which contributed the most to the government’s total tax revenue from industries, totalling $144,583,000 for 2023–24.

Further, the net tax from companies for the 2023–24 income year increased by 3.3 per cent to $145 billion, up from $140 billion in 2022–23.

Last week, the prime minister and treasurer made changes to previously announced budget measures, with new tax concessions set to cost the country $475 million over the forward estimates. Accounting bodies welcomed the changes but argued they do not do enough for start–ups.

These changes reflect a rising sentiment in opposition to the government’s CGT and trust tax changes in the federal budget, due to their impacts on corporate beneficiaries of discretionary trusts, and in exacerbating a “weak productivity trend,” Greco said.

“Our system is over–reliant on personal income tax, and that is unfairly punishing Australians also facing cost of living and housing pressures,” CA ANZ chief executive Ainslie van Onselen said around last year’s ATO tax statistics release.

It remains to be seen how the government’s consultation paper on its latest arrangements for innovative start–ups and its testamentary trusts will look in its final form following the consultation period ending 10 July 2026.