Australia Income Tax Rates for 2010 - 2011
AUD$ 1 - 6,000 Nil
AUD$ 6,001 - 37,000 15c for each AUD$ 1 over 6,000
AUD$ 37,001 - 80,000 AUD$ 4,650 plus 30c for each AUD$ 1 over AUD$ 37,000
AUD$ 80,001 - 180,000 AUD$ 17,550 plus 37c for each AUD$ 1 over AUD$ 80,000
AUD$ 180,001 and over AUD$ 54,550 plus 45c for each AUD$ 1 over AUD$ 180,000
AUD$ 1 - 6,000 Nil
AUD$ 6,001 - 37,000 15c for each AUD$ 1 over 6,000
AUD$ 37,001 - 80,000 AUD$ 4,650 plus 30c for each AUD$ 1 over AUD$ 37,000
AUD$ 80,001 - 180,000 AUD$ 17,550 plus 37c for each AUD$ 1 over AUD$ 80,000
AUD$ 180,001 and over AUD$ 54,550 plus 45c for each AUD$ 1 over AUD$ 180,000
Resident taxpayers are generally taxed on worldwide income, with an offset for
foreign tax paid on foreign income up to the amount of Australian tax payable on that income. Australian residents in certain lines of work overseas (e.g. aid, charity or government work) for a continuous period of 91 days or longer are exempt from Australian tax on their foreign earnings from that continuous foreign service period if the earnings are generally taxable in the country where sourced and are not exempt from tax by reason of a tax treaty in the foreign country. Nonresidents in Australia are taxable only on Australia-source income. Temporary residents are taxable on their worldwide employment income and on Australiansource investment income.
Residence – For tax purposes, an individual is resident if he/she ordinarily resides in Australia or satisfies 1 of the following statutory tests: is domiciled in Australia (unless the Commissioner of Taxation is satisfied that the individual's permanent home is elsewhere); has spent more than half the tax year in Australia (unless the Commissioner of Taxation is satisfied that the individual's home is elsewhere and he/she does not intend to take up residence in Australia); or is a contributing member (or the spouse or child younger than 16 years of such a member) to the superannuation fund for officers of the Commonwealth Government. A "temporary resident" for tax purposes is an individual who meets all of the following criteria: holds a temporary visa granted under the Migration Act 1958; is not an Australian resident within the meaning of the Social Security Act 1991; and does not have a spouse who is an Australian resident within the meaning of the Social Security Act 1991.
Filing status – Each taxpayer must file a return; joint returns are not permitted.
Taxable income – Taxable income for personal income tax purposes includes income from employment, business income, certain capital gains and passive income such as dividends, interest and rental income.
Capital gains – Capital gains derived from the disposal of assets acquired after 19 September 1985 are included in assessable income. For assets acquired after 1 October 1999 and held for more than 1 year, individuals are taxed on capital gains at their marginal rate on half the gain. For assets acquired before that date, individuals may choose between the new system and the old system, introduced in 1985, under which they are taxed at their marginal rate on the entire gain, indexed for inflation. Indexation of the cost base of existing assets was frozen at 30 September 1999. Capital gains tax applies only to taxable Australian property disposed of by foreign investors as from 12 December 2006.
Deductions and allowances – Business expenses may be taken as deductions if they are necessarily incurred in gaining or producing assessable income. Expenses of a capital, private or domestic nature are not deductible. Residents in Australia are allowed some tax rebates, including a rebate for dependents and certain personal expenses.
Tax Rates – Tax rates are progressive up to 45%. A "temporary resident" is granted a tax exemption for most foreign-source income and capital gains and for interest withholding tax obligations associated with foreign liabilities.
Australia Income Tax Rates for 2010 - 2011
Tax Rates for Non-Residents
AUD$ 0 - 37,000 29c for each $1
AUD$ 37,001 - 80,000 AUD$ 10,730 plus 30c for each AUD$ 1 over AUD$ 35,000
AUD$ 80,001 - 180,000 AUD$ 23,630 plus 37c for each AUD$ 1 over AUD$ 80,000
AUD$ 180,001 and over AUD$ 60,630 plus 45c for each AUD$ 1 over AUD$ 180,000
Non-residents are not required to pay the Medicare levy of Australia. The Australian tax rates for 2010 - 2011 above apply from 1 July 2010 (The tax year in Australia begins July 1 and ends June 30 next year).
If you are a non-resident of Australia for tax purposes, Australian tax is only payable on income that is earned in Australia. The main effects of being a non-resident are as follows:
- There is no tax free threshold; i.e. all salary and wage income earned in Australia is taxable.
- No requirement to pay the Medicare levy (non-residents do not receive the benefits of Medicare).
- There is a requirement to show Australian rental income in your tax return.
- Tax is withheld from unfranked dividends.
Australia Corporate Tax
Australia corporate tax rate is 30%.
Australian resident companies are subject to company income tax on their income derived from all sources. Non-resident companies are required to pay income tax only on Australian-sourced income.
Resident companies are those that are incorporated in Australia or those that carry on business in Australia and either have their central management and control in Australia or their voting power controlled by shareholders who are Australian residents.
The tax year runs from 1 July to 30 June. Companies' financial years usually coincide with the tax year. A taxpayer can choose to have an accounting period different to the tax year if they wish but this will require additional costs of preparing another set of accounts based on the tax year. Alternatively, if a taxpayer has a good reason for having a financial year other than 1 July to 30 June they can apply to the Australian Tax Office to have a substituted accounting period (SAP) and align the tax year with their financial year. The Australian Tax Office will generally accept applications for an SAP where an Australian subsidiary wants to align its tax year with its foreign parent company's financial year.
The company tax rate for the 2009/2010 tax year is 30% of the company's taxable income. Companies are generally required to 'self-assess' their likely tax liability in a financial year and pay the tax by quarterly instalments with the final tax liability being reconciled in an annual tax return. 'Likely tax' is the latest estimate of tax payable made by the company in a current financial year. If no estimate is made, 'likely tax' is the tax assessed in the preceding year.
Company tax is payable on a quarterly basis. Companies that are not required to report their goods and services tax (GST) on a monthly basis and with income tax payable of less than AUD $8,000 for the most recent income year can elect to pay an annual instalment of tax rather than quarterly instalments. Generally the annual payment date is 21 October when the income year ends on 30 June.
Quarterly company tax is payable within 21 days after the end of each quarter of the financial year. However, where taxpayers are eligible to pay other quarterly obligations on a deferred basis, the due date is the 28th day after the end of the quarter (except for the December quarter in which case payment date is 28 February).
There are two methods of working out the quarterly payment amount as follows:
- Instalment Income Option – the quarterly payment amount is the amount of gross assessable income earned for that quarter (less capital gains) multiplied by the instalment rate. The instalment rate is advised by the Tax Office and based on the company tax paid on the most recent tax assessment divided by the company's turnover (less capital gains). This method is available to all taxpayers.
- GDP adjustment notional tax option – the quarterly payment income amount is based on the assessable income figure from the most recent tax return multiplied by a GDP factor. The income amount is advised by the Tax Office. This method is available for individual taxpayers or other entities where their most recent assessed taxable income was under AUD $1 million. Certain categories of taxpayers such as farmers, sportspeople and artists may meet their liability for these four instalments by making two payments per year.
Residence – A company is resident in Australia if it is incorporated in Australia or, if not incorporated in Australia, it carries on business in Australia and either exercises central management and control there or has its voting power controlled by shareholders that are residents of Australia.
Basis – Resident companies are taxed on worldwide income. A nonresident company generally pays taxes only on income derived from Australian sources. As a general rule, tax rates and treatment are the same for all companies, including branches of foreign companies; however, there are exceptions for special types of companies such as cooperative firms, mutual and other life insurance companies, and non-profit organisations, which are taxed at slightly different rates.
Taxable income – To calculate taxable income, a company generally computes assessable income and subtracts allowable deductions. Assessable income derived by a company carrying on business would usually include gross income from the sale of goods, provision of services, dividends, interest, royalties and rent. Assessable income excludes exempt income (e.g. some dividends received from pooled development funds, income derived by certain entities such as charities, etc). Income characterised as non-assessable non-exempt income is also excluded from assessable income (e.g. income derived by certain foreign branches and non-portfolio dividends received by Australian resident companies from foreign companies).
Taxation of dividends – Australia operates a full imputation system for the avoidance of economic double taxation on dividends.
Under this system, the payment of company tax is imputed to shareholders in that shareholders are relieved of their tax liability to the extent profits have been taxed at the corporate level. Dividends paid out of profits on which corporate tax has been paid are said to be "franked" and generally entitle shareholders to an offset for the corporate tax paid. A simplified imputation regime applied from 1 July 2002.
Capital gains – Assessable income may include capital gains after offsetting capital losses. Net capital gains derived by companies are taxed at the 30% corporate rate. Australian residents are liable for tax on worldwide capital gains (subject to double tax relief). Where a company holds a direct voting interest of 10% or more in a foreign company for a certain period, any capital gain or loss on sale of the shares in the foreign company may be reduced (see under "Participation exemption"). Tax on capital gains was abolished for most foreign investors as from 12 December 2006; from that date, foreign investors include capital gains in assessable income only from assets that are "taxable Australian property" (e.g. direct and indirect interests in Australian real property and the business assets of Australian branches of nonresidents).
Losses – Tax losses may be deducted and carried forward indefinitely to offset against future assessable income provided a "continuity of ownership" (more than 50% of voting, dividend and capital rights) or a "same business" test is satisfied. However, capital losses can only be offset against capital gains. The carryback of losses is not permitted.
Rate – 30%
Surtax – No
Alternative minimum tax – No
Foreign income tax offset – Under the foreign income tax offset (FITO) rules, taxpayers are not required to quarantine assessable foreign income amounts into separate classes. The rules allow both Australian and nonresident taxpayers to claim a tax offset for assessable income on which they have paid foreign income tax. The amount of the offset is equal to the foreign income tax paid, subject to a cap. The offset may only be used in the income year to which the foreign tax relates - offsets may not be carried forward to future income years. Transitional rules apply for the first 5 years of the new FITO regime (from 1 July 2008), whereby old foreign tax credits may be carried forward. The 5-year period is based on the year in which the foreign tax credits came into existence.
Participation exemption – Capital gains or losses on the disposal of shares in a foreign company that is held at least 10% by an Australian resident company for a certain period may be reduced by a percentage that reflects the degree to which the assets of the foreign company are used in an active business. Furthermore, dividends received by an Australian resident company from a foreign company in which the Australian resident company holds at least 10% of the shares are non-assessable non-exempt income.
Holding company regime – No
Incentives – R&D activities are entitled to beneficial treatment.
Australian resident companies are subject to company income tax on their income derived from all sources. Non-resident companies are required to pay income tax only on Australian-sourced income.
Resident companies are those that are incorporated in Australia or those that carry on business in Australia and either have their central management and control in Australia or their voting power controlled by shareholders who are Australian residents.
The tax year runs from 1 July to 30 June. Companies' financial years usually coincide with the tax year. A taxpayer can choose to have an accounting period different to the tax year if they wish but this will require additional costs of preparing another set of accounts based on the tax year. Alternatively, if a taxpayer has a good reason for having a financial year other than 1 July to 30 June they can apply to the Australian Tax Office to have a substituted accounting period (SAP) and align the tax year with their financial year. The Australian Tax Office will generally accept applications for an SAP where an Australian subsidiary wants to align its tax year with its foreign parent company's financial year.
The company tax rate for the 2009/2010 tax year is 30% of the company's taxable income. Companies are generally required to 'self-assess' their likely tax liability in a financial year and pay the tax by quarterly instalments with the final tax liability being reconciled in an annual tax return. 'Likely tax' is the latest estimate of tax payable made by the company in a current financial year. If no estimate is made, 'likely tax' is the tax assessed in the preceding year.
Company tax is payable on a quarterly basis. Companies that are not required to report their goods and services tax (GST) on a monthly basis and with income tax payable of less than AUD $8,000 for the most recent income year can elect to pay an annual instalment of tax rather than quarterly instalments. Generally the annual payment date is 21 October when the income year ends on 30 June.
Quarterly company tax is payable within 21 days after the end of each quarter of the financial year. However, where taxpayers are eligible to pay other quarterly obligations on a deferred basis, the due date is the 28th day after the end of the quarter (except for the December quarter in which case payment date is 28 February).
There are two methods of working out the quarterly payment amount as follows:
- Instalment Income Option – the quarterly payment amount is the amount of gross assessable income earned for that quarter (less capital gains) multiplied by the instalment rate. The instalment rate is advised by the Tax Office and based on the company tax paid on the most recent tax assessment divided by the company's turnover (less capital gains). This method is available to all taxpayers.
- GDP adjustment notional tax option – the quarterly payment income amount is based on the assessable income figure from the most recent tax return multiplied by a GDP factor. The income amount is advised by the Tax Office. This method is available for individual taxpayers or other entities where their most recent assessed taxable income was under AUD $1 million. Certain categories of taxpayers such as farmers, sportspeople and artists may meet their liability for these four instalments by making two payments per year.
Residence – A company is resident in Australia if it is incorporated in Australia or, if not incorporated in Australia, it carries on business in Australia and either exercises central management and control there or has its voting power controlled by shareholders that are residents of Australia.
Basis – Resident companies are taxed on worldwide income. A nonresident company generally pays taxes only on income derived from Australian sources. As a general rule, tax rates and treatment are the same for all companies, including branches of foreign companies; however, there are exceptions for special types of companies such as cooperative firms, mutual and other life insurance companies, and non-profit organisations, which are taxed at slightly different rates.
Taxable income – To calculate taxable income, a company generally computes assessable income and subtracts allowable deductions. Assessable income derived by a company carrying on business would usually include gross income from the sale of goods, provision of services, dividends, interest, royalties and rent. Assessable income excludes exempt income (e.g. some dividends received from pooled development funds, income derived by certain entities such as charities, etc). Income characterised as non-assessable non-exempt income is also excluded from assessable income (e.g. income derived by certain foreign branches and non-portfolio dividends received by Australian resident companies from foreign companies).
Taxation of dividends – Australia operates a full imputation system for the avoidance of economic double taxation on dividends.
Under this system, the payment of company tax is imputed to shareholders in that shareholders are relieved of their tax liability to the extent profits have been taxed at the corporate level. Dividends paid out of profits on which corporate tax has been paid are said to be "franked" and generally entitle shareholders to an offset for the corporate tax paid. A simplified imputation regime applied from 1 July 2002.
Capital gains – Assessable income may include capital gains after offsetting capital losses. Net capital gains derived by companies are taxed at the 30% corporate rate. Australian residents are liable for tax on worldwide capital gains (subject to double tax relief). Where a company holds a direct voting interest of 10% or more in a foreign company for a certain period, any capital gain or loss on sale of the shares in the foreign company may be reduced (see under "Participation exemption"). Tax on capital gains was abolished for most foreign investors as from 12 December 2006; from that date, foreign investors include capital gains in assessable income only from assets that are "taxable Australian property" (e.g. direct and indirect interests in Australian real property and the business assets of Australian branches of nonresidents).
Losses – Tax losses may be deducted and carried forward indefinitely to offset against future assessable income provided a "continuity of ownership" (more than 50% of voting, dividend and capital rights) or a "same business" test is satisfied. However, capital losses can only be offset against capital gains. The carryback of losses is not permitted.
Rate – 30%
Surtax – No
Alternative minimum tax – No
Foreign income tax offset – Under the foreign income tax offset (FITO) rules, taxpayers are not required to quarantine assessable foreign income amounts into separate classes. The rules allow both Australian and nonresident taxpayers to claim a tax offset for assessable income on which they have paid foreign income tax. The amount of the offset is equal to the foreign income tax paid, subject to a cap. The offset may only be used in the income year to which the foreign tax relates - offsets may not be carried forward to future income years. Transitional rules apply for the first 5 years of the new FITO regime (from 1 July 2008), whereby old foreign tax credits may be carried forward. The 5-year period is based on the year in which the foreign tax credits came into existence.
Participation exemption – Capital gains or losses on the disposal of shares in a foreign company that is held at least 10% by an Australian resident company for a certain period may be reduced by a percentage that reflects the degree to which the assets of the foreign company are used in an active business. Furthermore, dividends received by an Australian resident company from a foreign company in which the Australian resident company holds at least 10% of the shares are non-assessable non-exempt income.
Holding company regime – No
Incentives – R&D activities are entitled to beneficial treatment.
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