Australia
Financial Year – 1 July – 30 June
Currency – Australian Dollar (AUD)
Corporate Tax Summary
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 of Taxation – Resident companies are taxed on worldwide income. A non-resident company generally pays taxes only on income derived from Australian sources. The tax rates and treatment are the same for companies and branches of foreign companies.
| Reference | ||
| Corporate Income Tax Rate (%) | 30 % | (a) |
| Branch Tax Rate (%) | 30 % | (a) |
| Withholding Tax Rate: | ||
| Dividends – Franked | 0% | Dividends paid by Australian resident companies are franked with an imputation credit (franking credit) to the extent that Australian corporate tax has been paid by the company on the income being distributed. Resident shareholders are entitled to receive a tax offset equivalent to the amount of the franking credit. Individual and Self-Managed Superannuation Funds are entitled to a refundable tax offset. Companies are entitled to carry forward the unused tax credits to offset against future years income. Non-resident shareholders are not entitled a refund of franking credits nor a credit towards future years’ income. |
| Dividends – Unfranked | 30 % | This is the final tax imposed on payments to non-residents only. A reduced rate of withholding applies to treaty companies and ranges from 0% – 15% depending on the country and level of ownership. |
| Dividends – Conduit Foreign Income | 0% | An exemption from dividend withholding tax applies to the part of the unfranked dividends that is declared in the distribution statement to be conduit foreign income. |
| Interest | 10 % | In general, this is a final withholding tax that is imposed on payments to non-residents only. |
| Royalties from Intellectual Property | 30 % | |
| Fund Payments from Managed Investment Trusts | 15 % | |
| Branch Remittance Tax | 0% | |
| Net Operating Losses (Years) | ||
| Carry back | 0 | |
| Carry forward | Indefinite |
(a) From 1 July 2017, a 27.5% corporate tax rate applies to companies with less than AUD25 million of turnover (AUD50 million from 1 July 2018). The corporate income tax rate will progressively decrease to 25% by 2026 for companies with less than AUD50 million of turnover.
Individual Tax Summary
Residence – For tax purposes an individual is a resident if he/she ordinarily “resides” in Australia or satisfies one of the following tests:
- Is domiciled in Australia (and does not have a permanent home elsewhere)
- Has spent more than half the year in Australia
- Is a contributing 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
- Does not have a spouse who is an Australian resident with inthe meaning of the Social Security Act 1991.
Basis of Taxation – Resident taxpayers are generally taxed on worldwide income, with a tax offset for foreign tax paid on foreign income, up to the amount of Australian tax payable on that income. Foreign residents are taxable only on Australian-source income. Residents who qualify as “temporary Australian residents” are taxable on their worldwide employment income, and on Australian-source investment income and capital gains from “Taxable Australian Property”.
Filing Status – Each taxpayer must file a separate return each financial year; joint returns are not permitted.
Personal Income Tax Rates
| Taxable Income | Tax Payable – Residents | Tax Payable – Non Residents |
| Up to $18,200 | Nil | 32.5% |
| $18,201 – $37,000 | Nil + 19% | 32.5% |
| $37,001 – $90,000 | $3,752 + 32.5% | 32.5% |
| $90,001 – $180,000 | $20,797 + 37% | $29,250 + 37% |
| Above $180,000 | $54,097 + 45% | $62,550 + 45% |
In addition to income tax, a 2% levy is payable on the taxable income of most Australian residents to fund Medicare, a universal health program that provides basic medical and hospital care free of charge. Relief is available to low- income taxpayers. Certain individuals on temporary visas are ineligible for Medicare benefits and can apply to the Minister of Health for a certificate of exemption.
Goods and Services Tax (GST)
| Rate | 10 % |
| Taxable Transactions | The GST is a transaction based, value added tax on the inputs and outputs of an organisation’s business activities. GST is charged at each step in the supply chain, with GST- registered entities including GST in the price of ‘taxable’ goods and services that they supply. Generally, entities that are registered for GST purposes can claim a credit for the GST paid on their inputs acquired for use in their enterprise, however in certain circumstances this is limited to the extent that they are making ‘taxable supplies’. |
| Registration | An entity that carries on an enterprise must register for GST if its annual turnover is at or above the registration turnover threshold. The current threshold is AUD 150,000 per year for not-for-profit entities and AUD 75,000 per year for all other entities. However an entity that carries on an enterprise may choose to register even if its turnover is below the registration turnover threshold. A non-resident carrying on an enterprise whose turnover is below the turnover threshold can choose to register for GST to recover the GST it pays on its inputs. |
| Filing and Payment | Each GST registered entity must account for its GST obligations on a Business Activity Statement (BAS) at the end of each tax period. Entities with an annual turnover of AUD 20 million or more must file monthly BAS. In general, entities with an annual turnover below AUD 20 million can choose to file a monthly or quarterly BAS. |
Other Taxes Payable
| Payroll Tax | Payroll tax is levied on employers by the states and territories, with the amount based on salaries, wages and benefits paid to employees. |
| Stamp Duty (Transfer Tax) | The states and territories impose stamp duty at rates of up to 5.75% on the transfer of real property and some other business property. Rates vary depending on the state/territory and class of business property transferred. In some states, extra stamp duty may be imposed by way of a surcharge (for foreign buyers of residential property) and premium duty rates. |
| Land Tax | Land tax is levied by the states and territories on entities owning land within their borders. Rates of up to 3.7% apply, depending on the jurisdiction. In some states, a land tax surcharge may be applied to foreign or absentee owners. |