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Commonwealth Tax

 

The Australian Tax Office administers federal taxes, which include income tax, the Goods and Services Tax (GST), Capital Gains Tax (CGT) and Fringe Benefits Tax (FBT).

Personal Income Taxes

 

Taxable income is an essential feature of Australian taxation system. All residents have to annually submit an Australian income tax return. Tax payers are gaenerally required to pay a certain percentage of tax depending on their level of income. If are required to pay tax in Australia, as an individual sole trader, partner or company, you must register for an income tax file number.

 

The taxes applicable to your income will rise as you earn more.

For the tax year 2011/2012, Income Tax Rates are as follows:

Taxable income Tax on this income
$0 – $6,000 Nil
$6,001 – $37,000 15c for each $1 over $6,000
$37,001 – $80,000 $4,650 plus 30c for each $1 over $37,000
$80,001 – $180,000 $17,550 plus 37c for each $1 over $80,000
Over $180,000 $54,550 plus 45c for each $1 over $180,000

 
Goods and Services Tax (GST)

GST affects all Australians and visitors. GST is a broad based consumption tax charged at the rate of 10% on the sale or supply of most goods and services and other items in Australia. Once a business is registered, GST will be payable on most goods and services it sells or supplies in the course of its business.

 

If you are in a business that has an annual turnover greater than $75,000.00 you must register for GST by obtaining an Australian Business Number (ABN). As an individual, if you earn investment income e.g. from property investments, shares etc greater than $75,000.00 you will also have to obtain an ABN.

Registered businesses are required to lodge a Business Activity Statement, either monthly or quarterly, to report the amount of GST collected on sales as well as to claim their input tax credits. The difference between these two amounts is either payable by or refunded to the business.

Capital Gains Tax (CGT)
CGT is not a separate tax as such but forms a part of income tax and is assessed on any capital gain made in a given year. Capital gain is basically the difference between what you paid for an asset and what you received for it. CGT applies to all assets acquired since tax on capital gains came into effect (on 20 September 1985), unless specifically excluded.

 

Pay As You Go (PAYG) Instalments
The PAYG instalment system is used if you are a sole trader, partner in a partnership or an employee of your own company. The Tax Office expects you to pay quarterly PAYG tax instalments on your taxable income, but these normally start after your first year in business.

When you submit your annual income tax return, the Tax Office assesses your tax liability for the entire tax year. The Tax Office will then credit any PAYG instalments you made during the year to see if you owe any tax. Note that PAYG instalments are different to PAYG withholding which is explained below.
Fringe Benefits Tax (FBT)
 
This is a tax paid on certain benefits employers provide to their employees or associates of their employees (typically family members) in place of or in addition to, salary or wages. FBT is separate from income tax and is based on the taxable value of the fringe benefit.
 
The term ‘benefit’ is broadly defined and includes rights, privileges and services. For example, an employer is providing a fringe benefit when they allow an employee to use a work car for private purposes, or provide an employee with a cheap loan, or pay an employee’s private health insurance costs.
 
Here at the Quinn Group, our team of accountants and consultants are able to assist you in planning for and lodging your business’s taxes. If you have any questions please submit an online enquiry or phone us on +61 2 9223 9166.