Australia is a country which apart from being a sound nation economically also has a plausible taxation system. The pillar of tax collection in Australia is the Australian Taxation Office. It is a part of the government which collects taxes of all nature from individuals, companies and firms etc. the largest volume of revenue of the government comes taxes of which majority of the revenue is from individual income taxes. These taxes are utilized by the government to pay for public services and transfer payments.
The Australian government apart from the income tax also charges on any gain from transfer of capital assets. This form of tax is known as Capital Gains tax. Capital assets on which taxes are levied consist of all properties. However there are some properties which have been exempted from such tax. The most important of them all is the residential house. Apart from residential house, some other assets on which CGT or capital gains tax is not applicable are –
– Assets which have been acquired on or before 19th September 1985. This is because these assets are treated as pre CGT assets.
– Personal movable effects of the assessee which were not acquired for more than $10000
– Any capital losses of the assessee
– Insurances mainly for life if sold or surrendered etc.
The gain that arises from sale of capital assets is discounted by 50% for computation of CGT.
Another form of taxation in Australia is the corporate tax which is levied on all companies. The rate is 30% flat on the income on the corporate level which is about to be distributed amongst the shareholders in the form of dividend. However partnership firms are not required to pay corporate taxes. Only companies having separate entities are liable to pay such tax.
Property tax is also a form of taxation implemented by the Australian government which charges tax on all properties held by the assessee. Some properties are however disallowed from taxation. Property tax is mainly levied on land or buildings etc.
To charge tax on goods and services, the Australian Taxation Office applies a value added tax system known as the Goods and Services Tax or GST where a fixed percentage of 10% is levied on each level of value addition in a commodity. Or simply put, GST is levied on most goods and services consumed in Australia.
Here was a brief overview of the basic system of Australia. There are some other forms of taxes too which are worth mentioning. They are excise, customs, luxury cars tax etc.