Who has the best online income tax calculators?

Working out your income tax rate can be difficult with changing rates and other factors that may apply to you, but online calculators can perform the task in seconds. Appearing in the form of a simple embedded tool on a web page, an online tax calculator allows you to enter your salary in a text field and click a button (usually labelled “calculate”) with the tax amount clearly displayed alongside net income. Some calculators may work out your income difference (or tax difference) between this financial year and the last one, even displaying graphs, charts or other graphics for easier understanding. But who offers the best online income tax calculator? Are some more versatile or informative than others? Does it make a difference which one you use, and can they be trusted to be accurate? Money Buddy calculates the efficiency of online income tax evaluation.

Online income tax calculators: The big sites

Big companies with a strong online presence, such as Yahoo7 and the Sydney Morning Herald, feature online tax calculators as part of their personal finance advice and information service, but usually only offer the same streamed Shockwave Flash application calculator that other, smaller sites use. Both Yahoo7 and the Sydney Morning Herald have exactly the same analysis tool, which is extremely simple to use and tells you only the basic necessary information (net income, tax amount, etc) but also offers an identical graphic display and comparison with the previous financial year. Clearly, with such major websites not actually designing their own tax calculator tool (feeding the Flash graphic file from another website instead), major websites only require the tool to perform a simple task and get the information across quickly, which any of the calculators featured in this article do.

It’s interesting that Australian Property Investor (API) magazine online and the government’s Australian Tax Office (ATO) website both have their own style of tax calculator. Whilst both of these are easy to use, they don’t offer the same snapshot Flash graphic tool (with attention-grabbing pie chart image) that the other sites do, with API instead opting for a simple small table of fields, producing essentially the same results though. However, API’s website features information (taken from the ATO) dated 1 July 2005, meaning that it’s long overdue for an update. The ATO website, on the other hand, offers a checkbox style form for finding out your income tax rate, with more complex fields to fill in, such as residency status, which some visitors may find unnecessary, even though ATO can probably be trusted to give the most accurate results.

Types of income tax calculators

Most online calculators are the same essentially, but will provide you with the necessary information to know exactly how much tax you’re paying and what your net income is (if you are only aware of the gross figure), and almost any online income tax calculator will tell you whether you’re paying more tax in the current financial year, compared with the previous one. For example, News.com.au compares the difference between the current and previous financial years, with regards to income tax, but doesn’t display a graphic to compare the results as Yahoo7, Sydney Morning Herald, Xinc.net.au or MyState.com.au do. News.com.au only differs slightly, describing the difference in yearly tax as "tax saving per week" rather than "difference per week". It’s easy to see from this that online calculators perform a simple job aimed at getting the basic information, specific to the user, across quickly, and therefore they do not differ greatly.

The standard Flash tax calculator tool (found in the same style on most websites) can almost certainly be relied upon to be accurate, as the calculator is fed from a specialised external site offering the service. However, checking the accuracy confirms this to be true, with the calculator tool showing a list of the up to date 2007/2008 tax thresholds, acknowledging the increase in the 30% tax threshold from $25,001 to $30,001, newly active for the 2008 financial year.

Online income tax calculators can be a useful way to view at a glace how much net income you will earn (annually and weekly), how much tax you can expect to pay, which tax threshold you belong to and how much difference in tax you are paying between the current and previous financial year. Not expected to do anything further, these effective and easy to use tax calculators can be found on most of the websites you’d expect, as well as many other dedicated financial portals, and this useful tool can help you to quickly understand your own specific tax deduction.