The calculator is an interactive tool for calculating taxes paid, transfer (welfare) payments received, and the effective average and marginal tax rates for working-aged Australians (aged 22 to 54). This note provides some basic information on what the calculator is and how it can be used. To do so it focuses on the tax paid at varying levels of labour earnings for a working age sole parent with two children.

The tool takes user defined demographic and labour market characteristics for a particular Australian worker and calculates this person’s take-home pay for either different hours of work or varying private income levels. This is a work disincentive calculator, as it translates how the tax and transfer system affects the incentives particular Australians have to work an extra hour, earn an extra dollar or enter the workforce.

Taxes and transfers influence workforce participation by creating varied incentives across different demographics. For instance, individuals with similar jobs might have different take-home incomes due to targeted benefits, such as those aimed at families with young children.

The briefing note is accompanied by the calculator and a technical guide. The calculator currently is in Beta and has a narrow focus – prime-working age individuals who have stable earnings over the year.