How Much Tax Will You Pay? Comparing Salaries in Korea & Australia
When comparing income taxes for salaried employees in Korea and Australia, many professionals wonder: which country takes a bigger cut from your paycheck?
While both countries impose relatively high income taxes, their systems differ significantly in complexity, structure, and additional levies.
Let’s break it down to see how each system affects take-home pay and financial planning.
1. Income Tax Structure:
One of the biggest differences between Korea and Australia’s tax systems is their complexity.
South Korea: A Multi-Layered Tax System
In Korea, salaried employees face a multi-layered taxation system that includes:
National Income Tax: Progressive tax rates ranging from 6% to 45%.
Local Income Tax: An additional 10% of the national tax, effectively increasing the total tax burden.
Resident Tax: A small but mandatory tax at the local government level.
Other Mandatory Contributions: Such as National Pension and National Health Insurance, which are deducted from salary.
Australia: A Straightforward Tax System with Extra Levies
Australia’s system, while still progressive, is relatively simpler:
Federal Income Tax: Progressive tax rates ranging from 0% to 45%.
Medicare Levy: An additional 2% of taxable income.
Division 293 Tax: An extra 15% tax on superannuation contributions for high-income earners (those earning > AUD 250,000 per year).
Superannuation Contribution: A compulsory retirement savings scheme, where 11% (as of 2024) is contributed by the employer.
2. Income Tax Brackets: Who Pays More?
Both countries use a progressive tax system, meaning higher income earners pay a larger percentage in taxes. Here’s a comparison of the tax brackets:
Korea’s Income Tax Rates (2024)
| Income Bracket (KRW) | Tax Rate |
|---|---|
| 0 - 14M | 6% |
| 14M - 50M | 15% |
| 50M - 88M | 24% |
| 88M - 150M | 35% |
| 150M - 300M | 38% |
| 300M - 500M | 40% |
| 500M - 1B | 42% |
| Over 1B | 45% |
Australia’s Income Tax Rates (2024)
| Income Bracket (AUD) | Tax Rate |
| 0 - 18,200 | 0% |
| 18,201 - 45,000 | 19% |
| 45,001 - 120,000 | 32.5% |
| 120,001 - 180,000 | 37% |
| Over 180,000 | 45% |
Key Observations:
Lower Incomes: Korea has a lower starting tax rate (6%), but its local income tax increases the total percentage.
Middle-Class Incomes: Australia’s middle tax brackets (32.5%) are higher than Korea’s (24%-35%), meaning middle earners pay more in Australia.
High Earners: Both countries impose a maximum tax rate of 45%, but Korea has additional local taxes, while Australia has levies like Division 293.
3. Additional Tax Considerations
Local Taxes in Korea
Unlike Australia, Korea imposes a local income tax (10% of the national tax), which means the actual tax burden is higher than what the federal income tax table suggests.
Australia’s High-Income Levies
High earners in Australia face additional taxes like Division 293, which is a 15% tax on superannuation contributions if their income exceeds AUD 250,000 per year.
Superannuation vs. National Pension
Korea: National Pension contributions are deducted from salaries and act as a government-run retirement fund.
Australia: Employers contribute to superannuation (11%), but this money belongs to employees and can be accessed after retirement.
4. Take-Home Salary Comparison
To illustrate how much a salaried employee takes home after taxes, let’s compare a mid-level salary earner in both countries.
Example: A Salary of KRW 100M vs. AUD 100,000
South Korea (KRW 100M / AUD 100,000 Equivalent)
National Tax: 24% = KRW 24M
Local Tax (10% of National Tax): KRW 2.4M
Total Tax Paid: KRW 26.4M (AUD 26,400)
Take-Home Salary: KRW 73.6M (AUD 73,600)
Australia (AUD 100,000)
Income Tax: 32.5% = AUD 22,967
Medicare Levy: 2% = AUD 2,000
Total Tax Paid: AUD 24,967
Take-Home Salary: AUD 75,033
5. Severance Pay: A Key Difference
One significant difference between Korea and Australia is how they handle end-of-employment benefits.
Korea: 퇴직금 (Severance Pay)
- In Korea, employees who leave a company after at least one year of service receive severance pay.
- The standard calculation is one month’s average salary per year of service.
- This acts as a lump sum retirement benefit or a financial cushion when switching jobs.
Australia: No Equivalent Lump Sum Severance
- Australia does not have a mandatory severance pay system like Korea.
- Instead, employees rely on superannuation, where employers contribute 11% of salary to a retirement fund, but this money is not accessible until retirement age (except in special cases).
- Some employees may receive a redundancy payout, but this depends on company policies and tenure.
- While Korean employees receive a large severance payout when leaving, this isn’t factored into monthly salary.
- Australian employees have their retirement savings steadily growing through superannuation, but they cannot access it early like Korea’s lump sum payout.
Final Verdict
Middle-income earners (~AUD 100,000 equivalent) pay slightly more tax in Korea due to additional local taxes.
High-income earners (~AUD 180,000+) get taxed heavily in both countries, but Australia adds levies like Division 293.
Superannuation in Australia is employer-funded, while Korea’s National Pension is deducted from salary.
Korea provides severance pay (퇴직금) when leaving a job, whereas Australia does not.
Conclusion: Which Country Has a Higher Tax Burden?
For middle-income earners: Korea’s extra local taxes result in a higher burden.
For high-income earners: Both countries impose a 45% rate, but Australia adds additional levies.
For overall complexity: Korea’s multiple tax layers make it more complicated to calculate net pay.
Final Thought
If you prefer a simpler tax structure and employer-funded retirement contributions, Australia may be more favorable.
However, if you are comfortable navigating multiple tax categories and deductions, Korea’s system allows for more tax-saving strategies.
Understanding these differences is essential for financial planning, whether you’re a Korean employee considering working in Australia or an Australian looking at job opportunities in Korea.
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