Tax in Australia
14 January 2013
Overview of Tax
Financial Year
The Australian financial year is from 1 July to 30 June.Tax Returns
By 31 October each year, all Australian taxpayers must complete a tax return - "the TaxPack". This is a self-assessment system, whereby each taxpayer declares their income and allowances to arrive at their own tax liability.Tax File Number (TFN)
Every Australian resident with earnings from employment or investment needs a Tax File Number (TFN). You should apply for your TFN soon after arrival - either at a Tax office, a Centrelink office or online. Your TFN will be allocated and sent to you within 10-28 days, but if you get work in the meantime, just tell your employer you have applied, so you don't get taxed on a higher rate.Australian Business Number (ABN)
If you run a business, you will normally be required to register for an Australian Business Number. You will also have to register for the Goods and Services Tax (GST) if your turnover exceeds $75,000 per annum.Important - Please Read
In Australia, anyone providing financial product advice must be licensed through ASIC (www.asic.gov.au). Aussiemove.com is not a financial advisor and we do not give financial product advice - we do provide general factual information only, obtained from official government sources, such as the ATO (www.ato.gov.au) and statistics from what we believe to be reputable sources. You should consider obtaining independent advice before making any financial decisions.
Our advertisers/sponsors may be Australian or overseas companies that provide services to migrants either before they depart their home country or when they are resident in Australia - the licensing they require will depend on where they are located and where their clients are resident. If you would like to find out about their services, please use the links to contact them directly in order to discuss your own requirements with them.
Income Tax
Employment
Employers are required to deduct income tax directly from their employees' salaries each pay period (each month or fortnight). See Income Tax Rates.Self-Employment
Those in business for themselves are required to complete a quarterly Business Activity Statement (BAS) to account for their business tax, GST, superannuation fund payments etc. The system is known as "Pay As You Go" (PAYG).Investment Income
Individuals with investment income (such as rental income or dividends from shares) greater than $2000, will normally have to complete a quarterly Instalment Activity Statement, and pay the tax due. This also comes under the "Pay As You Go" (PAYG) scheme. You can change to one annual payment if your PAYG tax is less than $8000.Income Tax Rates
Australia has a tiered income tax system, where the more money you earn, the higher tax rate you pay on the extra income (as in the UK). Current (2012-2013) rates are:Example
On a gross taxable salary of $100,000 you would pay tax of:
$17,547 plus 37% of $20,000 (the portion over $80,000) which equals $24,947
Plus 1.5% of the lot ($100,000), for Medicare levy = $1,500
Giving a total tax bill of $24,947 + $1,500 = $26,447 (effective tax rate=26.45%)
Leaving take-home pay of $73,553
Or in weekly terms, $1,923 per week gross leaves you with $1,414 in your pocket.
Other points to note
- For those arriving in Australia part-way through the tax year, the tax-free amount is reduced from $18,000 according to the number of months of residency in the tax year.
- Add the Medicare Levy Surcharge (extra 1%) if applicable. The surcharge kicks in for families earning $168,000 or more, but see the ATO for more details.
- Any allowances due to the taxpayer, will reduce the tax due (eg. Family Tax Benefit).
The ATO provides an online Tax Calculator which will give you an estimate of tax due and net income.
Other Taxes
Capital Gains Tax (CGT)
Capital Gains on assets such as shares or investment property are included in the assessable income and taxed at the individual's highest rate of tax. However, if the asset has been held for at least one year, the liability is reduced by 50%. see ATO for more ...Goods and Services Tax (GST)
GST was introduced in July 2000 and is applied at 10% to most goods and services. For the individual there is nothing to do (except pay it!). Businesses, however, must register and charge GST if their annual turnover exceeds $75,000. The business must account for GST on its sales and purchases and pay the difference to the ATO on a quarterly basis. see ATO for more ...Stamp Duty
Stamp duty is payable on certain financial transactions and can be quite a nasty surprise for migrants. Rates differ from state to state, so follow the links below to get specific rates.Real Estate
The biggest lump of stamp duty you are likely to pay is when you buy a house. For example, if you buy a $250,000 property in NSW, you will pay over $7,000 in stamp duty. You'll also have to pay duty on any mortgage you take out (about $500 on a $150,000 loan).Vehicles
Stamp duty is payable when you buy a new or used vehicle. For example, a used car bought for $20,000 in Victoria would cost another $800 in stamp duty.Other Transactions
Here are some of the other financial transactions that may attract stamp duty; rental agreements, buying shares, insurance and life assurance policies.Stamp Duty Links - by state
| NSW | VIC | QLD | WA | SA | TAS | NT | ACT |
Tax for Contractors
Personal Services Income
This refers to tax legislation introduced in 2001 to prevent certain contractors from diverting their income through a company or trust in order to reduce tax or delay paying it.Who is affected?
Contractors who operate as one-man companies and derive the majority of their income from a single source. Typically, IT contractors may come under this category.Tax on Foreign Income
This section may be of some importance to migrants who may be considering leaving property or other investments in their former country. Anyone with endowment policies, pensions, unit trusts, investment trusts or shares in their former country may want to seek advice on their potential tax liability in Australia.Foreign Income
This covers foreign wages or income such as rent from foreign property and dividends from shares in foreign companies. As a general rule, Australian residents must pay tax on all income, whether it arises in Australia or overseas. However, it may be possible to offset tax already paid in the source country.UK & Australian Taxation - FAQs
 | Provided by UHY Haines Norton Chartered Accountants | |||
| Am I taxed on monies I bring into Australia at the time I move to Australia? Generally not. However, should you leave funds overseas waiting for a better rate of exchange, the movement in the rates from the date of residency to their actual transfer would be assessable/deductible in Australia. Special rules apply to certain types of payments. For example, an income distribution from a UK trust after you arrive in Australia (become an Australian tax resident) could be subject to Australian tax. What happens if I leave property in the UK? What happens if I decide to rent out the property? In addition, as an Australian tax resident you will need to report the rental income received less any expenses for the financial year 1 July to following 30 June and pay your Australian taxes less any UK taxes paid. Do I pay tax in Australia on my UK Income? Does my visa have any affect on my tax position? So who are temporary residents? Do I pay tax in Australia on my income in the UK, if I don't bring it to Australia? In the year I leave the UK am I entitled to a tax refund? How do I claim a tax refund? Is there anyone in Australia who can assist me with a UK tax return? Is there anyone in Australia who understands the UK & Australian tax system? Does Australia have death taxes? Am I entitled to a British State Pension? How much am I entitled to? Can I make top up national insurance contributions? How are Jersey or Channel Island companies & trust treated? | ||||
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Tax Advisors
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| UHY Haines Norton is an association of independent Chartered Accountant firms in Australia and New Zealand and a member of UHY International Limited, an international network of independent accounting and consulting firms. The national association was formed in 1984 and it is ranked in the top 25 accounting groups in Australia. We have offices in the six major cities and four regional locations. UHY Haines Norton Perth provides a full range of migrant services related to tax planning, business migration and pension transfers. Migrants and overseas investors have benefited from our expertise for many years. TAX Other services include:
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Other Tax Links
The Australian Taxation Office (ATO) has all the official details on tax for individuals and businesses.
MoneyManager online magazine has a number of useful factsheets about tax.
The CPA Australia website can be used to find a Certified Practising Accountant (CPA) by location and industry experience.
The Australian Securities & Investments Commission (ASIC) - regulator for Australian businesses, including financial advisors.
Disclaimer
Information on this website is intended to give the reader an overview of many aspects of life in Australia, such as healthcare, real estate, tax, superannuation etc.While we at Aussiemove.com have performed a large amount of research on each subject area, we do not claim to be experts in those fields and we recommend that migrants discuss their requirements with companies specialising in those fields before making purchases, investments or other decisions concerning their move.
The content of this website is general in nature - no specific advice is intended.
We provide links to other companies as a service to our readers. We have taken reasonable care to ensure that each linked website does not contain offensive or inappropriate material. However, we are not responsible for the accuracy of any of the material in any linked website, or the advice that may be contained therein.