Federal Income Tax Introduced (1915)

A federal government income tax was introduced in 1915, in addition to existing state income taxes, to finance involvement in the First World War. The tax was designed by the Australian statistician, Sir George Knibbs, and was levied on individual taxpayers at progressive rates. Although rates of tax imposed ranged from 3% – 25% the high-income threshold exempted most wage and salary earners. 

Following the war, the federal government continued to impose an income tax, meaning that two tiers of government were sharing and competing for revenue from a common taxation base. The state and federal government taxing systems were kept separate and administered separately by the different bureaucracies.