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Taxation in Australia

Taxation in Australia

Our team of taxation lawyers in Australia is able to help all individuals interested in knowing more about the principles applicable to them if they derive income, both when they are entrepreneurs who have a company in Australia and when they are individuals who receive remuneration as well as any other form of income.

What are the corporate tax rates in Australia?

The main taxes for companies in Australia include the following:

  • – the company income tax: 30% or 27.5% for companies that have an aggregate annual turnover of more than 25 million AUD in the 2017-2018 tax year (this turnover rate is subject to change in the coming years, we recommend seeking specialized tax guidance from one of our taxation lawyers in Australia).
  • – the goods and services tax (GST): is the equivalent of the value-added tax and has a 10% rate.
  • – the domestic withholding tax: on dividends, interest, royalties, with values of 0%, 30% (for dividends and 30% for royalties) and 0% and 10% on interest.
  • – payroll tax: it is based on the salary the employer pays to the employee and can have values between 2.5% and 6.85%.
  • – other taxes: the real estate tax, land tax, stamp duty, petroleum resource rent tax.

Resident companies in Australia are taxed on their worldwide income while nonresidents will only be asked to pay the income tax on the profits they derive from the country. A for the purpose of taxation, a resident corporation is one that is incorporated as per the Australian company laws or, if this does not apply when it has its place of general management and control in the country. Companies can request the specialized services offered by our taxation lawyers in Australia for the purpose of tax compliance and tax minimization (whenever possible). 

The assessable income of a company includes the gross income from sales, and the provision of services, that from dividends, interest, and royalties as well as income from rent. Not included here are certain categories of dividends (when received from pooled development funds as well as in other cases). Our team of attorneys in Australia can give you more information about the nonassessable nonexempt income.

As far as the registration for the goods and services tax is concerned, companies are required to register when their annual turnover is 150,000 AUD or above this value for non-profit entities and 75,000 AUD for all other types of companies. Companies are also allowed to perform a voluntary registration when their annual turnover threshold is below these values. Our taxation lawyers in Australia can give you more details on the goods and services tax registration and compliance.

What are the principles of corporate tax compliance?

The tax year for companies is from July 1 to June 30 the following year. Companies can use a different year, however, this is subject for approval from the Australian Taxation Office. Legal entities are required to assess their own tax liability and they can make quarterly tax payments (with a due term of four weeks after each quarter is closed). Tax returns are filed annually, with two due dates according to the size of the company, and failure to observe the terms of failure to file complete tax returns results in penalties.

Our of our taxation lawyers in Australia can give you information about the tax treaties signed by Australia and the relief from double taxation provided by these agreements.

What are the personal taxation rates in Australia?

The principle of personal taxation in Australia is also based on residency, with residents being taxed on their worldwide income and foreign nationals on their Australian-sourced income. An individual is considered a resident if he has his place of domicile in the country, if he has spent more than half of the tax year in Australia or if he is a contributing member (or the spouse) to the superannuation fund for officers of the Commonwealth Government. For taxation purposes, a temporary Australian resident is an individual who has a temporary visa, is not a resident in the traditional sense as stipulated by law or is not the spouse of an Australian resident. 

The personal income tax rates in Australia are progressive, up to 47%. Each taxpayer is expected to file separate tax returns and joint ones are not permitted.

Other taxes on individuals in Australia include the stamp duty (with rates imposed at a state and territory level) and the social security tax. There is no applicable inheritance or estate tax and no net wealth tax.

Our team of taxation lawyers in Australia can help with additional information on any of the matters treated in this article. A special category of taxation services provided by our experts also includes tax minimization – the associated practices of legally reducing the tax burden.

For more information on the taxation principles and the rules applicable to companies and individuals, please feel free to contact our law firm in Australia.