Current tax system in Australia obliges the residents of the country to pay taxes on all income received both in Australia and abroad. However, if any tax is already paid in the other country, then the taxpayer can get considerable reductions.
At the end of the fiscal year (June 30), the taxpayer must fill in and submit (no later than October 31) a tax declaration, in which he must indicate all income received during the past fiscal year.
The main tax in Australia is income tax. The system of taxation is progressive (the bigger income, the bigger rate of tax). For annual income less than $6,000 no taxes are paid. For non-residents with annual income up to $37,000 29 cents for each dollar are paid. For bigger amounts of incomes bigger rates are applied. It’s reasonable to enquire specifically about the rate, at it usually changes slightly every year.
The next important tax is medicare levy. As with the income tax, it is differentiated. For most Australians it accounts for 1.5% of taxable income. For older people, this tax may be bigger than 1.5%, and if your annual income is less than the threshold amount, then the amount of medicare levy decreases and in some cases it is not paid at all.
Even if your individual income exceeds the threshold, you can still qualify for a tax reduction on a basis of the amount of the total family income.
People with high income – $73,000 for a single without dependents or $146,000 for a couple with or without a child (for each subsequent child $1,500 is added to this sum) – pay medicare levy at a 2,5% rate.
Flooding tax in Australia was introduced in order to compensate for losses from the floods in Queensland. Its amount accounts for 0.5% for Australian residents, whose annual income exceeds $50,000. For people with incomes exceeding $ 100,000 the tax rate is increased to 1%. The rate is not valid permanently; it’s reasonable to enquire specifically about each year.
Capital Gains Tax
Capital Gains Tax (CGT) is a tax on income which arises as a result of sale of your assets (such as property or shares, which increased at the time of their original selling price). Usually the sale of a car or a family home is exempt from CGT.
Non-residents of Australia (both companies and individuals) are levied by CGT only if they sell assets, acquired in Australia after September 20, 1985. Individuals should be prepared to pay 50% of capital gains, although in some cases there are opportunities to reduce the CGT to 25%. For more information on calculation of CGT applied to your case, please visit the Australian Taxation Office (ATO).
In contrast to the progressive income tax corporate tax on companies’ profits is calculated at a single rate of 30%. Local governments and state governments do not establish additional corporate taxes.
Goods and Services Tax
Goods and Services Tax (GST) is an Australian analog of the value added tax, established by the federal government at a rate of 10%. A number of socially important goods and services (food, a range of medical services, etc.) are exempt from GST.
In some cases, manufacturers of goods and services may claim a refund of GST. For more detailed information on return of GST, with regard to your case, please visit the Australian Taxation Office (ATO).
Property tax is set by local governments of the states. Any residential, industrial or commercial property is subject to such tax. The magnitude of the property tax depends on its type. For example, for residential property the rate of tax is around 0.35%, for commercial use – a little more than 1%, for agricultural property – 0.2%. In some states, an additional charge for the “quality” of the land, on which the property is located, is established.
Stamp duty is paid for transactions of buying and selling real estate. It is charged by local governments, and its rate is determined by the value of real estate. (By the way, the stamp duty is levied on all financial transactions as well: lease, loans, checks, bills of lading, etc.). For example, for the property, which is worth $100,000, the amount of stamp duty is $2 for each $100.
Taxes on the development of fire service and emergency services are also paid by the owners. For example, if the property is worth $300,000, this tax will account for approximately $1,500.
Fringe Benefits Tax
Fringe Benefits Tax (FBT) is paid by employees (or their associations) for “benefits”, received from employers. “Benefits” are encouragements from the employer, which may be expressed in very different forms: the transfer of the property, other rights, privileges, services, etc. (for example, use of a company car for private purposes).
Payroll tax is set by state governments and paid by the employer. The tax rates vary considerably from state to state, and the average payroll tax rate is approximately 7%.
Land tax is paid annually by all landowners. The amount of tax depends on the size and the cost of land as well as the type of land use. The tax rates vary from state to state and are absent only in the Northern Territories.
There is no inheritance tax in Australia. However, be aware that inherited property can be subject to CGT.
Transfers of dividends to non-residents of Australia are accompanied by paying 30% tax. The tax rate may be reduced to 15%, if double taxation treaty is proved to take place.
Royalties include revenues from the use of licenses, patents, “know-how”, etc. Transferring royalty to non-residents of Australia is accompanied by paying 30% tax. The tax may be reduced to 10%, if double taxation treaty is proved to take place.
Incomes, derived by a non-resident of Australia from Australian financial institutions (banks, insurance and financial companies, etc.) are subject to 10% tax at source.
In addition to direct taxes, in Australia there are excise taxes on certain products (tobacco, alcohol, petrol, etc.) and customs duties on many imported goods (alcohol, tobacco, perfume, etc.)
Australian Government has signed over 40 agreements with various countries, aimed at avoiding double taxation. For more precise information on relevant regulations it’s reasonable to contact the authorities directly.
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