Our readers may have already read our "Doing Business in Australia" series of articles posted before. Recently quite a few relevant facts and policies have been updated. Hence we have produced a new version. You will be able to receive the updated articles about "Doing Business in Australia" in the coming weeks.
Tax
Australia imposes taxation on the worldwide income of persons and entities resident in Australia for tax purposes and the income of non-residents sourced in Australia (subject to any relevant double taxation agreement).
Different forms of direct and indirect taxes are levied by both the federal and state governments, such as:
Federal Government
Income Tax and Capital Gains Tax
Broadly, Australia levies tax on three sources of income for individual taxpayers: personal earnings (for example, salary and wages), business income and capital gains. Income received by individuals is taxed at progressive rates. Income derived by companies is taxed at a flat rate of 30%. Non-residents are normally taxed on Australian income derived from Australian sources only. Most businesses are required to pay quarterly (Pay as you go or PAYG) instalments throughout the year based on their estimated tax liability.
Generally, capital gains are taxed at the income tax rate applied to the person making the gain. A capital gain is only subject to tax when the gain is realised. For non resident individuals and trusts, a discount of 50% may apply to the gain accrued up to 8 May 2012, provided that the individual or trust obtains a valuation of the taxable property as at that date. No discount applies to any gains accrued after this date.
Fringe Benefits Tax (FBT)
FBT is applied to most, although not all, fringe benefits (which are generally non-cash benefits provided by an employer to its employees). Most fringe benefits are also reported on employee payment summaries for inclusion on personal income tax returns that must be lodged annually.
Goods and Services Tax (GST)
The GST is a value added tax of 10% on most goods and services transactions in Australia and is intended to be paid by the ultimate Australian consumer.
Indirect Taxes
Indirect taxes are levied on goods such as petrol, oil, alcohol and tobacco.
Superannuation Tax
Tax is levied on payments made to superannuation (pension) schemes. Concessional contributions (being contributions by employers, salary sacrifice contributions and contributions by self employed persons) to superannuation funds incur a tax of 15% when paid. There is a cap on how much can be contributed in concessional contributions and, if the cap is exceeded, the member incurs excess tax.
Withholding Tax
Foreign investors in Australian real estate can enjoy a concessional tax rate of 15% rather than 30% through the Managed Investment Trust Withholding Tax Regime if the foreign investor resides in a jurisdiction with which Australia has an effective Exchange of Information agreement. This includes China, United Kingdom, United States of America, New Zealand, Indonesia, Singapore and Malaysia.
In addition, a concessionary rate of 10% applies if the fund payment was made by a Managed Investment Trust that holds only energy efficient commercial buildings constructed on or after 1 July 2012.
State Government
The individual state governments each levy taxes such as employee payroll tax, gambling taxes, motor vehicle taxes, land tax and/or stamp duty.
Please note that the Australian tax system is complex and cannot be summarised without omitting other relevant taxes or the details required to analyse its impact. It is strongly recommended that tailored tax advice be sought before any steps are taken.
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To view our previous news for Chinese investors and various articles in relation with the topic ‘Doing business in Australia’, please click the button on the upper-right hand corner on our WeChat platform, and choose ‘view history’. The contents include:
Business set up in Australia, business structures,company administration, etc.
Background information of Australia, including Australian government, legal system, and business structures, etc.
Laws and regulations in various common areas, including protection of technology and intellectual property, anti-trust and consumer law, contract law, business migration, real property, public takeovers, and electronic commerce etc.
