A business coach has told his followers a $200,000 annual salary ‘barely cuts it’ for a lot of married Australians with kids.
Bashar Derbas touted his views in a TikTok video on Wednesday saying living comfortably on this amount depends on a person’s situation.
The outspoken coach said someone’s marital status, number of children and where they live are all factors on whether $200,000 a year is actually a high salary.
‘In short, if you are married, if you’ve got children and your wife doesn’t work – I think $200,000 barely cuts it,’ the coach said.
Mr Derbas who is in the top two per cent income bracket in the country told Daily Mail Australia the rising costs for families was sinking the power of the so-called high wage.
‘And let alone the inflation, the kids’ activities, school fees, let alone the wife doing a bit of a shopping spree,’ the business guru said.
Bashar Derbas (with partner Jo on left) said he believes $200,000 ‘barely cuts it’ for Aussies who are married with children
‘If you hear that someone is on [$200k per year], you think they must be living so comfortably … there is no way I would be able to buy a home even on that salary within 30km of the Sydney CBD – I am lucky enough to have purchased a home pre-2009.’
The engineer who drives a Toyota Yaris said his mates who are builders or in real estate don’t even need to get loans for houses.
‘Is it really worth to go down the educated route,’ Mr Derbas said.
Someone earning $200,000 a year would be among the top 3.5 per cent of Australians who fall into the top tax bracket which cuts in at $180,000 a year.
Bashar Derbas (pictured) said families on $200k per year ‘barely cuts it’ as a high salary
Mr Derbas suggested in the video that singles living in the Harbour City would do incredibly well on the same salary.
‘I can tell you $200k, if you are a single person living in Sydney, is ample – you will be able to live a very comfortable life.’
The business coach told Daily Mail Australia a single friend of his who is on a similar wage to him saved money while he was away in Borneo.
‘He rents share accommodation in Marrickville in Sydney’s inner west for $250 a week as part of his four other mates who pitch in for the rent.’
Meanwhile, the video sparked a stir on the social media platform with one user agreeing, saying the amount wasn’t enough for families in the bigger cities.
‘It isn’t much. If you’re married with a couple of kids you’re struggling to get the average house in Melbourne or Sydney on that amount,’ he said.
‘You get no government benefits and pay a pile of tax.’
One other commenter said they lived ok on 200k a month in Sydney’s west, while another said they were struggling on $400k per year in the same city.
A person on $200,000 a year would be earning more than double Australia’s average, full-time salary of $90,917 a year.
But that same person forks out 45 per cent to the tax man, excluding the Medicare levy.
‘It isn’t much. If you’re married with a couple of kids, you’re struggling to get the average house in Melb/Syd on that amount,’ one social media post said
Mr Derbas said Aussies on $200k are also taxed heavily – copping the maximum 45 per cent rate
With Sydney’s median house price standing at $1.382million, a borrower with a 20 per cent deposit – paying off a home loan on their own – would need to earn at least $184,000 a year to avoid being in mortgage stress.
But with houses in the city being so expensive, those on $200,000 would not be able to afford houses in pricey areas such as parts of the North Shore or Northern Beaches.
The Australian Prudential Regulation Authority, the banking regulator, considers a debt-to-income ratio of ‘six’ or more to be potentially dangerous, especially with the Reserve Bank tipped to keep raising interest rates.
How much money you need to earn to be considered rich in Australia NOW as inflation eats into wages
By Stephen Johnson for Daily Mail Australia
An Australian full-time worker now needs to earn $91,000 a year to be considered an above-average income earner.
High inflation is diluting the buying power of workers as wages struggle to keep pace with price increases.
Before bonuses and overtime, the average, full-time salary stood at $90,917 in November 2021, new Australian Bureau of Statistics data released on Thursday showed.
Australians putting in longer hours saw their wages grow at an annual pace of just 2.1 per cent.
An Australian full-time worker now needs to earn $91,000 a year to be considered above average. High inflation is diluting the buying power of workers as wages struggle to keep pace with price increases (pictured are women at Sydney Opera Bar)
This was well below the inflation rate of 3.5 per cent, which meant full-time workers saw price rises gobble up their pay rises.
Full-time workers fortunate enough to get bonuses and overtime saw their pay levels go up by 3.8 per cent to $94,260.
Their salaries were at least outpacing inflation, which last year rose to the highest level since 2008 during the height of the Global Financial Crisis.
The mining industry offered the highest, average, full-time salary of $138,128, followed by media and information technology on $113,276, an industry where salaries rose by 7.1 per cent.
Professional and technical services – a broad field covering lawyers, accountants, architects and engineers – typically had salaries of $106,673.
The mining industry offered the highest, average, full-time salary of $138,128
Finance and insurance specialists did even better, with salaries of $110,042.
Public servants and police officers – known as public administration and safety – had average pay of $98,326.
At the other end of the pay scale, retail workers earned $68,349 a year, well below the average $87,953 of the health and social assistance sector but above accommodation and food services on $63,377.
The Australian Capital Territory, the home of Canberra public servants, had the biggest increase of 4.8 per cent, taking average salaries to $102,882.
Tasmanian workers saw their pay rise by 3.6 per cent to $80,168 as Queenslanders enjoyed a 3.5 per cent increase to $86,637.
South Australian salaries were up 3.2 per cent to $82,685 as West Australians received a 3 per cent raise taking average salaries to $98,582 in the mining-rich state.
In New South Wales, pay levels have increased by just 0.5 per cent to an above-average $91,577, as Victorian pay levels rose 2.4 per cent to $91,494.
Northern Territory saw their pay levels fall by 0.3 per cent to $88,327.
Men working full-time made $96,018 on average compared with $82,742 for women.
CommSec senior economist Ryan Felsman said while the gender pay gap was shrinking, women were more likely to have lost working hours as a result of last year’s Delta outbreak lockdowns in Sydney and Melbourne.
‘Pandemic government restrictions have typically impacted female workers most due to increased caring duties for families and a loss of part-time jobs,’ he said.
‘Encouragingly, however, in the six months to November, average weekly ordinary time earnings for women working full-time rose.’
Other Australians earn nothing like what you think – by PETER MARTIN
I’m guessing you earn less than $200,000.
And I’m guessing you think you’re missing out. People keep telling you so.
Anthony Albanese says anyone earning $200,000 dollars a year ‘can’t be described as being in the top end of town’.
On the other, Scott Morrison parried with interviewers when he was asked whether people on $180,000 to $200,000 are ‘high income’.
‘They’re hardworking people working out on mines and difficult parts of the country,’ he says. ‘They deserve a tax cut.’
Hardworking or not, Australians on more than $200,000 are rare. And an awful lot of them don’t work at all.
$200,000 is unusual
I’ve never quite understood why politicians were so keen to tell us such incomes are normal. It might be because they are on them. Each backbencher gets $211,250 plus a $32,000 electorate allowance (boosted by $19,500 if they turn down the use of a private-plated vehicle) plus home internet and travel allowances.
Very detailed tax office figures tell us what the rest of us earn, all 14.3 million of us.
Only 2 per cent of those required to pay tax earned more than $211,365. Only 3 per cent earned more than $188,667.
Everyone else — the other 97 per cent — earned less than $188,667, most of them a good deal less, and many more earned even less and weren’t required to pay tax.
What you report to myGov the ATO reports to us, with a lag.
The figures released on Monday are for 2018-19, because it takes a while for the tax office to receive and process all the forms. In 2019, Albanese said $200,000 wasn’t the “top end of town”; 2018 was when Morrison unveiled Stage 3.
The typical taxable income (typical in the sense that half earned more than it, half less) was $59,538. If that’s what you’re on, you’re more likely to find people who earn close to what you do than anyone who earns more or less.
We can get an idea of how lonely it is at the top by examining the top 1 per cent, those Australians with a taxable income of greater than $350,134.
There aren’t many of them, just 110,613 — 82,258 men and 28,355 women.
Only 39,209 have taxable incomes of more than $500,000, and of these only 14,467 have taxable incomes of more than $1 million.
Life at the top needn’t be taxed
You’re probably thinking there’s a difference between taxable incomes and actual incomes, and the tax office figures show you’re right.
A total of 15,358 Australians reported total incomes of more than $1 million. By the time they had applied legitimate tax deductions, the number had shrunk to 14,467.
Some of these million-dollar earners were able to shrink their taxable incomes very low indeed — 45 cut their taxable incomes to less than the tax-free threshold of $18,200, meaning they didn’t have to pay anything, not even the Medicare levy.
Another eight managed to escape the Medicare levy even though their taxable incomes were above $18,200, and another 21 escaped income tax while paying the Medicare levy.
Many of these millionaires weren’t “hardworking” in the sense Morrison meant. Only 9,144 of the 14,467 Australians on taxable incomes of more than $1 million worked. Only 17,883 of the 222,813 Australians on more than $250,000 worked.
Only nine of the 45 million-dollar earners who cut their taxable incomes to less than the tax-free threshold worked. And 27 received so-called franked dividends from companies that had paid tax, enabling them to cut their own tax bills or receive rebates from the tax office. On average, each received dividends of $2.25 million.
Many who aren’t taxed are generous
Seventeen of the 45 million-dollar earners received capital gains, on average $6.4 million each. And 38 received interest, averaging $290,000 each.
Against that were set expenses, small and large. Three claimed for work-related car expenses averaging $27,340 each, 13 claimed expenses averaging $57,200 for assistance with tax affairs, eight claimed for previous losses from farms averaging $684,000 each, and eight for losses from other businesses averaging $408,000.
But by far their biggest expense was donations. Fourteen gave away a total of $161 million in gifts or tax-deductible donations — an extraordinary average of $11.5 million each.
Most of us aren’t like these people.
Most of us claim more modest deductions
Three-quarters of Australians in the tax system earn less than $89,173.
Those on that income typically claim between $1,500 and $1,900 in deductions (men claim more than women) and, thanks to negative gearing, claim losses on properties of between $1,800 and $2,600 (again, men claim more than women).
Such Australians typically report between $1,200 and $2,100 in capital gains (more for women than for men).
If higher-earning Australians are unaware of how most of us live, it’s understandable. Surgeons mix with other surgeons. On average each of Australia’s 4,150 surgeons earns $394,303, making surgery our highest-paying occupation.
We mix with people like us
And they increasingly marry each other. In 2010 the Productivity Commission found that 68 per cent of Australia’s high earners were married to other high earners. A decade earlier it was 49 per cent.
And high earners live near each other. The average income in Sydney’s Double Bay (Australia’s highest-earning suburb) is $202,598. The average income in Ruse in Sydney’s Campbelltown is $55,100.
People in Double Bay don’t drive through Ruse on their way to the city.
In the United States, it is often the other way around. There, low-income suburbs are more likely to be near the city, meaning that high-income Americans at least see them as they go into town.
That most of us have little idea of what others earn suits those in charge when they propose tax cuts skewed to high earners.
They can con us that most of us will be better off, and those on high incomes can con themselves they are not already better off.
Peter Martin is visiting fellow at the Crawford School of Public Policy, Australian National University. This article originally appeared on The Conversation.