Federal and State Taxes in Australia
The Commonwealth Constitution grants both the Commonwealth and states the power to legislate in relation to income . However, government policy and High Court decisions have greatly shifted the power of income taxation towards the Commonwealth. This shift came as the result of the and the , which validated the Government's Uniform Scheme.
Capital gain tax
A capital gain occurs when an event in respect of an asset causes a taxpayer to be entitled to a capital amount that is greater than the taxpayer's costs in relation to, amongst other things, acquiring and maintaining that asset: s 100-35, ITAA97. The purpose of capital gains tax is to treat net gains as taxable income on the sale or disposal of an asset gains tax is to treat net gains as taxable income on the sale or disposal of an asset
Fringe benefits is a on a benefit given by an employer to an employee which is other than salary or wages.
Corporate tax is imposed on the income of corporations at a general rate of 30%, and 27.5% for small businesses. The company tax rate is planned to slowly decrease to 25% by 2026 -2027 and apply to all corporations.
Exercise, customs and departure taxes
S90 of the Constitution gives the Commonwealth exclusive power to impose laws relating to duties, customs and excise.
Goods and services tax
GST is a broad based consumption tax (similar to the Value Added Tax in other countries) imposed on the sale of most goods and services in Australia and those imported into Australia. It is levied at a flat rate of 10%.
Businesses or individuals carrying on an enterprise that have an annual turnover of more than a specified amount are required to register for GST purposes.
Every employer must pay a minimum level of superannuation (known as the superannuation guarantee) to its employees to ensure that workers have money set aside for their retirement.
With amendments coming into effect, the minimum rate will increase progressively over the next six years until it reaches 12% from 1 July 2019 onwards.
Stamp duty is a on written documents or instruments and certain transactions, including:
motor vehicle registrations and transfers;
hire purchase agreements and transfers of property — such as businesses, real estate and certain shares.
The rate of stamp duty varies between the states and territories but is imposed either at a fixed rate, or at an ad valorem rate which increases with the value of a transaction.
A general exemption from stamp duty may be available to charitable or benevolent societies or institutions and public hospitals. Under the NSW legislation, a corporation is not per se an “institution” for exemption purposes: Sargents Charitable Foundation v Chief Commissioner of State Revenue (NSW) 2005 ATC 4632.
shares and options; and
certain contractor payments.
Payroll tax is levied at a specific rate once an employer’s payroll expenditure exceeds a certain threshold. Each state and territory has its own rate and threshold. The threshold effectively allows for small employers to be exempt from payroll tax.
Individuals and other entities who own land in Australia over a prescribed value are liable to pay land tax annually on the combined value of all taxable land owned.
New South Wales use progressive scales of taxation in relation to land tax. The minimum threshold land values above which land tax must be paid are $406,000 in New South Wales.