As with all taxation systems, the tax system in Australia covers a wide variety of different areas from import tax to income tax, but it is income tax that is the most important to Australian nationals and others residing in Australia.
History of Income Tax in Australia
Income tax first started in Australia in 1880 when Tasmania decided to start taxing all income companies generated in the state due to an economic issue in government. It did not take long before other Australian states saw the importance of taxing income and followed suit with southern states of Australia introducing the tax in 1884 and the rest of Australia having income tax by 1907.
Income Tax Today
Today the tax of income in Australia is broken down into three areas; these are personal earnings, business income and capital gains tax.
The personal tax in Australia differs on a persons’ earnings such as a salary or wages. The lower the amount a person earns in Australia, the lower the percentage of tax paid. This tax is classed as a progressive tax and means people pay an amount dependent on their means (income they get). This means that people pay anywhere between zero percent (tax is paid on earnings over six thousand Dollars only) and forty five percent) this is only for those earning over one hundred and eighty thousand Dollars per year).
Company tax in Australia is set at a flat thirty percent, although a company does have other means at their disposal to reduce the amount paid by using means such as a yearly dividend to shareholders.
Capital Gains tax falls under the tax of income in Australia and affects any person or corporation that owns an asset, any entity owning anything in a sense, although the percentage paid does differ.
Unlike other countries around the world Australia deliver a fair income tax system that is easy to understand so all residents of the country understand what their tax status is and how much they are required to pay.