Tax Methodology

This is the master methodology document for every analytical page on this site that involves tax, wage, wealth, or pension modelling. It exists so that any number shown on those pages can be traced back to a formula, a source, and a set of explicit assumptions.

Every column label on every analytical page describes a calculation, not a conclusion. "Plausibility gap" is a number. It is not an accusation. The reader is invited to form their own view.

Rate data

Personal income tax brackets (2025–26, resident)

Source: ATO, individual income tax rates. As at 1 July 2025.

Medicare levy

• 2.0% on taxable income above the low-income threshold.
• Single threshold: levy shades in from $27,222 at a 10% marginal rate, reaching the full 2.0% rate at ~$34,028.
• Not modelling family or senior pensioner thresholds.

Medicare Levy Surcharge (MLS)

Applies when the taxpayer does not hold eligible private hospital cover. The Peasant Tax Calculator defaults to "has private hospital cover" because the MLS is almost always cheaper to avoid than to pay.

Low Income Tax Offset (LITO)

• Maximum offset: $700.
• Phase-out 1: 5c per $1 between $37,500 and $45,000.
• Phase-out 2: 1.5c per $1 between $45,000 and $66,667.

HECS/HELP repayment

• 19 bands from $67,000 (1.0%) to $216,000+ (10.0%).
• Rate applies to the whole of repayment income, not just the excess above the threshold — this is why HECS creates sharp "cliffs" at each band.

Super guarantee

• 12.0% from 1 July 2025. Paid by the employer on top of wages. Not a deduction from take-home.

Core formulas

Gross → net

income_tax = sum over brackets: max(0, min(upper, gross) - lower) * rate
lito_offset = LITO schedule applied at gross
income_tax_after_offset = max(0, income_tax - lito_offset)
medicare = 0 if gross <= 27222
        else min(gross * 0.02, (gross - 27222) * 0.10)
mls = gross * MLS_tier_rate if no private cover else 0
hecs = gross * hecs_rate_for_gross if has_hecs else 0
net = gross - income_tax_after_offset - medicare - mls - hecs
employer_super = gross * 0.12   # on top, not a deduction

Net → gross (bisection)

Because the gross-to-net function is piecewise linear with cliffs at LITO and HECS thresholds, algebraic inversion is fragile. Instead we binary-search the gross that yields the target net:

lo, hi = 0, 2_000_000
repeat 60 times:
    mid = (lo + hi) / 2
    if gross_to_net(mid).net < target_net: lo = mid
    else: hi = mid
    stop if hi - lo < 0.005
return (lo + hi) / 2

60 iterations is massive overkill — convergence to ±$0.01 is typically reached in fewer than 30 iterations, but the loop is bounded for safety.

"Days worked for the government"

effective_rate = (income_tax + medicare + mls + hecs) / gross
gov_days_of_five = effective_rate * 5

The 5 comes from a Monday-to-Friday working week. A 24% effective rate corresponds to 1.2 days / 9.6 hours of work per week going to the ATO.

Politician wealth analysis (Stage 3)

Per-politician computation

For every tracked politician with a populated term_start:

years_served = ((term_end or today) - term_start).days / 365.25
career_gross = salary_package * years_served                        # flat-salary assumption
assumed_tax = gross_to_net(salary_package, no_hecs, private_cover)  # applied per year, summed
assumed_living = living_expenses * years_served                     # default $80k/yr
plausible_ceiling = career_gross - assumed_tax - assumed_living
gap = declared_net_worth - plausible_ceiling                        # null if not disclosed

Assumptions (and what this model deliberately does not capture)

• Flat salary. Everyone's salary_package is held constant across their career. Real parliamentary salaries have risen ~3% per year; ministers earn more than backbenchers; shadow ministers earn less than sitting ministers. The model ignores all of this because the variance is smaller than the signal we are trying to surface.
• No investment returns. A plausible ceiling of "career gross minus tax minus living expenses" ignores the fact that someone who invested savings consistently in the ASX200 over 30 years may legitimately hold 3–5× what they "saved" in nominal terms. The methodology page is explicit about this.
• Living expenses. Defaulted to $80,000/year indexed, configurable via GET parameter on the dashboard. This is not a judgement about what politicians "should" spend — it is a conservative floor representing a mortgage-or-rent, groceries, childcare, and discretionary spending baseline that produces a permissive ceiling (i.e. favourable to the politician). A smaller living-expenses figure would produce a higher ceiling and a smaller "gap".
• Declared net worth. Sourced directly from each politician's public register of interests entry, with a linked source URL. Where a politician has not disclosed a figure, the field is null and the row is shown as "not disclosed" — never imputed.
• Missing data never produces a number. If any input is missing, the dependent output is shown as "—", not as an estimate.

Flag tiers

Row flags are derived purely from the ratio of declared net worth to plausible ceiling:

• plausible: declared ≤ 1.25× plausible ceiling
• notable: declared between 1.25× and 2.5× plausible ceiling
• implausible: declared > 2.5× plausible ceiling

These are labels on a ratio, not editorial claims. A politician may have inherited, married into, or legitimately invested their way into an "implausible" tier. The flag is an invitation to investigate further — not a finding.

Parliamentary pension analysis (Stage 4)

PCSS (pre-9 Oct 2004) — defined benefit

Any federal politician first elected before 9 October 2004 is a member of the Parliamentary Contributory Superannuation Scheme. The rule of thumb:

annual_pension ≈ final_salary * min(0.75, 0.50 + 0.025 * max(0, years_served - 8))

• Minimum vesting: 8 years of service (≥ 2 terms).
• Cap: 75% of final salary.
• Indexed annually (AWOTE-linked prior to 2012, then the better of CPI and PBLCI).
• Payable from age 55+ (reformed from immediate-on-retirement in 2001).
• Commutation: up to 50% of the pension can be taken as a lump sum at retirement.

The coefficient 0.025 per year beyond 8 is a simplification of the actual PCSS accrual table — the real schedule has slightly different rates for each year. Used here as an explainable approximation for dashboard purposes; exact entitlements are administered by the Department of Finance.

Source: Parliamentary Contributory Superannuation Act 1948 Source: Department of Finance — parliamentary superannuation

Post-2004 — PSSAP / accumulation

final_balance ≈ sum over years_served of (salary * 0.154) * (1.06 ** remaining_years)

• 15.4% employer contribution (above the standard SG rate — negotiated separately).
• Nominal 6% return assumption. Real-world returns vary significantly; 6% is a median long-run balanced-fund assumption.
• No lifetime guarantee — the member's retirement income depends entirely on the balance and the drawdown strategy.

Lifetime cost to taxpayers (PCSS members already drawing)

already_drawn = years_since_retirement * annual_pension
projected_future = remaining_life_expectancy_at_retirement * annual_pension
lifetime_cost = already_drawn + projected_future

Remaining life expectancy uses ABS life tables for 65-year-olds (approximately 20 years for men, 22 years for women). For simplicity, the dashboard uses a single gender-neutral figure of 21 years.

Source: ABS — life tables

What this methodology does not claim

• It does not claim any politician has acted unlawfully. Every number is derived from public declarations and public law.
• It does not claim that the modelled ceiling is accurate. It is a conservative transparent floor, not a forecast.
• It does not claim the pension projections are the exact entitlements. Exact entitlements are administered by the Department of Finance. These are dashboard-accuracy approximations intended to make orders of magnitude visible.
• It does not replace investigative journalism. It is an invitation to investigate — a tool that makes the baseline assumptions explicit.

Changelog

• 2026-04-11: initial methodology document. Covers Stage 1 (wage calculator), Stage 3 (wealth reality), and Stage 4 (pension reality).

Related pages

• Peasant Tax Calculator
• Australian Tax Guide
• Elite Tax Tactics
• Politician Wealth Reality
• Parliamentary Pension Reality
• Parliamentary Pension Schemes

Last reviewed: 11 Apr 2026