Taxation Advice for Business in Australia

Understanding how taxation applies to your business is an important consideration in starting and managing a successful organisation. In Australia, there are various forms of taxation imposed by both the Commonwealth government and the various State and Territory governments.

Commonwealth taxes are imposed Australia wide whilst State and Territory taxes are applicable only to the State/Territory in which the tax is imposed. Administration of taxation in Australia is carried out by the Australian Taxation Office (ATO). For most businesses, the financial year runs from 1 July to 30 June.

The information below is a quick outline of the taxes that Australian businesses are liable for.

Please refer to Commonwealth Taxes and State Taxes for detailed explanations and examples of how each tax works.

Please refer to our Calendar for some of the key taxation dates.

Goods and Services Tax – GST is a tax on most goods sold and services provided in Australia. It is set at a rate of 10% and paid by registered businesses, and usually passed onto the consumer in the supply chain.

Capital Gains Tax – CGT is a tax you pay on any capital gains you make. This must be included on your annual income tax return. CGT is not taxed separately. Instead, it forms part of your income tax. A person is taxed on their net capital gain at their marginal tax rate.

Fringe Benefit Tax – FBT is a tax paid by all employers for fringe benefits provided to employees. A fringe benefit may be defined as a form of ‘payment’ to an employee, although not in the form of salary or wages.

Pay-As-You-Go – PAYG withholding is an employer’s legal obligation to withhold amounts from payments made to employees for income tax purposes. An employer must register for PAYG withholding.

Company Tax – Companies are required to pay Company Tax on their taxable income, usually at the rate of 30%. Shareholders of these companies are also taxed on the profits distributed to them by the company.

Stamp Duty – Stamp Duty varies across states and territories, and rates are charged at the discretion of the individual governments. For example, if a company purchases a property then they are liable for Stamp Duty.

Land Tax – Land Tax is a state tax that NSW land owners must pay annually – with ownership of the land, and hence a requirement to pay the tax, being recorded/classified as at 31 December (midnight). Most people are NOT required to pay land tax if the land in question is their principal place of residence, or, if the land is used for farming

Payroll Tax – Payroll Tax is essentially a tax on wages which covers a range of benefits and income. Once an employer/business group pays out wages that are more than the monthly threshold, they must pay payroll tax.

Council Rates and Water Rates – Each council collects rates from residents and businesses in its municipality to help fund its local community infrastructure and service obligations. Council rates are a form of property tax. Water rates are the prices we pay for our water supply and it is guided by local councils and water cooperation.

As the Australian Taxation system is quite complex and failure to meet your tax obligations may result in serious consequences, it is important that you seek professional advice from accounting and taxation experts.

If you would like more information or assistance regarding tax related matters, complete and submit the Express Enquiry form on the top right hand side of this page and we will contact you to discuss your enquiry, or give us a call on +61 2 9223 9166.