Comprehensive and meticulously documented facts about taxes for your reference.
Businesses use activity statements to report and pay a number of tax obligations, including GST, pay as you go (PAYG) instalments, PAYG withholding and fringe benefits tax. Non-business individuals who need to pay quarterly PAYG instalments also use activity statements.
Activity statements are personalised to each business or individual to support reporting against identified obligations.
Activity statements for businesses may be due either quarterly or monthly. Generally, businesses can lodge and pay quarterly if annual turnover is less than $20 million, and total annual PAYG withholding tax is $25,000 or less. Businesses that exceed one or both of those thresholds will have at least some monthly obligations. Non-business individuals are generally required to lodge and pay quarterly.
Businesses or individuals with small obligations may be able to lodge and pay annually. Some taxpayers may receive an instalment notice for GST and/or PAYG instalments, instead of an activity statement.
The Australian Taxation Office (ATO) web site provides instructions on lodging and paying activity statements. Detailed instructions are provided for each of the different tax obligations:
- Businesses with GST turnover of $75,000 or more must register for GST and need an ABN to do this
- Non-profit organisations with GST turnover of $150,000 or more must register for GST and need an ABN to do this
- Entities seeking to be endorsed as a deductible gift recipient need an ABN to obtain that status
- Charities seeking exemption from income tax need an ABN.
- Companies registered under the Corporations Law
- Business entities carrying on an enterprise
- Trustees of self-managed superannuation funds should obtain an ABN for the fund.
- Prime cost method – decline in value each year is calculated as a percentage of the initial cost of the asset
- Diminishing value method – decline in value each year is calculated as a percentage of the opening depreciated value of the asset.
- Part of, or an interest in, a CGT asset
- Goodwill, or an interest in it
- An interest in a partnership asset
- An interest in a partnership, that is not an interest in a partnership asset
- Land and buildings
- Shares in a company
- Units in a unit trust
- Debts owed to a taxpayer
- A right to enforce a contractual obligation
- Foreign currency.
- 50% for Australian resident individuals
- 33 1/3% for complying superannuation entities and eligible life insurance companies
- Special rules apply to foreign resident individuals.
Excise duty is a tax on certain types of goods that are made in Australia including alcohol, tobacco, fuel and petroleum products.
Customs duty is imposed at an equal rate on imported alcohol, tobacco, fuel and petroleum products to ensure imported and local goods are treated consistently. These goods are referred to as Excise Equivalent Goods (EEGs).
Entities who manufacture or store excisable goods must hold an appropriate licence.
MORE: See the Excise section of the ATO web site for more information.
From 1 July 2017, eligible individuals can make voluntary contributions to their superannuation account under a First Home Super Saver (FHSS) Scheme. The Scheme enables individuals to save for their first home and take advantage of the concessional taxation arrangements that apply in the superannuation system. An FHSS tax is payable if the individuals do not either purchase their first home within a specified period or recontribute an amount into superannuation.
An individual is eligible to participate in the FHSS scheme if he/she is 18 years of age (or older), never used the FHSS scheme previously, and has never owned real estate (except in rare cases).
The key features of the FHSS Scheme are:
- The maximum voluntary contributions under the scheme is $15,000 a year, and $50,000 in total. Voluntary contributions can be non-concessional or concessional contributions and are subject to the contributions caps.
- An individual may apply to the ATO to withdraw up to their “FHSS maximum release amount” , which is the sum of eligible contributions (100% of non-concessional contributions and 85% of concessional contributions) and associated earnings, to use as a deposit on a home. To initiate the withdrawal, the individual must request a “first home super saver determination” (FHSS determination) from the Commissioner, who will then issue a release authority
- The individual’s superannuation fund must pay the amount to be released to the Commissioner, who will withhold an amount for any tax payable and pay the balance to the individual. The amount withheld will reflect the best estimate of the tax payable or, if such an estimate cannot be made, 17% of the amount released (FHSS released amount).
- Concessional contributions and earnings that are withdrawn are included in the individual’s assessable income and receive a non-refundable 30% tax offset. For released amounts of non-concessional contributions, only the associated earnings are taxed, also with a 30% tax offset.
- An individual can enter into a contract to purchase or construct their home provided he/she has applied for and received an FHSS determination, and have applied for a valid request for release under that determination within 14 days of entering into the contract.
- An individual will generally have 12 months after money is released from superannuation to sign a contract to purchase a home or construct a home. The premises must be occupied as soon as practicable and for at least six months of the first year after it is practicable to do so.
- If a home is not purchased, the individual is required to re-contribute an amount into superannuation or pay 20% FHSS tax on the FHSS released amount to unwind the concessional tax treatment when it was released.
- Board – meals provided to an employee and family members, where the employer provides accommodation and at least two meals a day
- Car – a car made available for the private use of an employee or associate (car benefits can be valued using either the statutory formula or operating cost methods)
- Car parking – a car parking space provided for use by an employee or associate, on either the employer’s premises or in a commercial car parking station
- Debt waiver – releasing an employee or associate from an obligation to repay a debt
- Income tax exempt body entertainment – FBT is payable by income tax exempt employers on entertainment provided to an employee or associate by way of food, drink or recreation
- Expense payment – paying or reimbursing a private expense incurred by an employee or associate
- Housing – accommodation provided that is an employee’s or associate’s usual place of residence
- Living-away-from-home allowance – a cash allowance paid to compensate an employee for increased costs because the employee’s duties require them to live away from their usual place of residence
- Loan – a loan provided to an employee or associate either interest-free or at a discounted interest rate
- Meal entertainment – entertainment provided by taxable employers by way of meals to an employee or associate
- Property – goods provided to employees either free or at a discounted price
- Residual – any fringe benefit (as defined) that does not fall into one of the specific categories
Fuel schemes provide credits and grants to reduce the costs of some fuels or provide a benefit to encourage recycling of waste oils. There are various types of schemes:
- Fuel tax credits for business – provides a credit for the excise or customs duty included in the price of fuel used for business activities, in machinery, plant, equipment and heavy vehicles.
- Fuel tax credits – domestic electricity generation and non-profit emergency vessels or vehicles.
- Cleaner fuels grants scheme – encourages making or importing fuels that have a lesser impact on the environment. Eligible cleaner fuels include biodiesel and renewable diesel, as well as low or ultra-low sulphur conventional fuels like low sulphur premium unleaded petrol (PULP) and ultra low sulphur diesel (ULSD). The cleaner fuels grants scheme closed on 1 July 2015.
- Product stewardship for oil (PSO) program – supports recycling oil for environmental sustainability. This includes recycling used oil and using recycled oil.
The former Energy grants credits scheme that applied to alternative fuels and diesel no longer operates for new purchases of fuel.
- Purchases where GST was not included in the price (GST-free acquisitions)
- Purchases used to make input taxed supplies
- Purchases for the entity’s private use.
- the entity is a small business (or non-business enterprise) with an annual turnover of less than $2 million – this includes the turnover of related entities
- the entity accounts for income tax on a cash basis
- the entity runs a type of enterprise that is permitted to account on a cash basis regardless of turnover – generally a government school, a charity, or a gift deductible entity.
|Taxable income||Tax on this income|
|$0 – $18,200||$0|
|$18,201 – $37,000||19c for each $1 over $18,200|
|$37,001 – $90,000||$3,572 plus 32.5c for each $1 over $37,000|
|$90,001 – $180,000||$20,797 plus 37c for each $1 over $90,000|
|$180,001 and over||$54,097 plus 45c for each $1 over $180,000|
|Taxable income||Tax on this income|
|$0 – $90,000||32.5c for each $1|
|$90,001 – $180,000||$29,250 plus 37c for each $1 over $90,000|
|$180,001 and over||$62,550 plus 45c for each $1 over $180,000|
Advances (or loans), including the forgiving of debts, made by a private company to a shareholder (or an associate of a shareholder) are automatically deemed to be dividends, unless they come within certain specified exclusions. The deemed dividend can only apply to the unpaid present entitlement to which the private company is entitled.
If the advances are converted to a loan before the due date of the company’s income tax return, the advances will not be treated as a dividend. However, this loan must be written and have a maximum term and minimum interest rate.
There is also a requirement that the shareholder make minimum repayments on the loan. If the minimum repayments are not made, a deemed dividend will arise in relation to the shortfall.
The government-funded Paid Parental Leave scheme provides financial support for parents to take up to 18 weeks off work following the birth or adoption of a child, with pay at the National Minimum Wage. Dad and Partner Pay provides eligible working dads or partners with up to two weeks of pay at the National Minimum Wage.
Employers receive funds from the Department of Human Services and pay eligible employees in the same way they would normally pay salary or wages.
Pay as you go (PAYG) withholding is a system for withholding amounts from payments to employees, other individuals and businesses. An entity will have withholding obligations if the entity:
- Has employees, including company directors and officeholders
- Has other workers such as contractors, and voluntarily agrees to withhold tax from payments to them
- Makes payments to other businesses, if they don’t quote an Australian business number (ABN) to the entity
- Makes certain other payments that are subject to withholding.
If you are an employer or run a business and withhold amounts from payments, you need to:
- Register for PAYG withholding
- Register as an employer of working holiday makers (417 or 462 visa’s) if applicable.
- Withhold amounts from wages and other payments
- Lodge activity statements and pay the withheld amounts to the Australian Taxation Office (ATO)
- Provide payment summaries to employees and other payees
- Provide the ATO with an annual report once each income year has ended.
Payment summaries and annual reports are not required in relation to amounts reported using single touch payroll.
The Australian Taxation Office (ATO) provides a variety of rate tables, tax calculators, and other tools on many topics, including the following:
- Capital gains tax
- Fringe benefits tax
- Fuel tax credits
- Goods and services tax
- Income tax
- PAYG withholding
MORE: To access these tools, navigate to the Calculators & Tools section of the ATO web site.
Some business in certain industries need to report to the ATO the payments made to contractors. The reporting is made in the taxable payments annual report and is due by 28 August each year.
The industries covered include:
- building and construction services
- cleaning services for contractor payments from 1 July 2018
- courier services for contractor payments from 1 July 2018
- road freight services for contractor payments from 1 July 2019
- information technology (IT) services for contractor payments from 1 July 2019
- security, investigation or surveillance services for contractor payments from 1 July 2019
|CGT 15-year asset exemption*||If you are 55 or older and retiring and your business has owned an asset for at least 15 years, you won’t pay capital gains tax when you sell the asset.|
|CGT 50% active asset reduction*||If you have owned an asset to conduct your business, you will only pay tax on 50% of the capital gain when you sell the asset. For individuals (including partners in partnerships and beneficiaries of trusts), this reduction applies in addition to the standard* 50% CGT discount, thereby reducing the taxable amount to 25% of the capital gain. * For foreign or temporary residents, a reduced CGT discount between 0-50% applies depending on individual circumstances.|
|CGT retirement exemption*||There is CGT exemption on the sale of a business asset (up to a lifetime limit of $500,000). If you are under 55, money from the sale of the asset must be paid into a complying superannuation fund, or retirement savings account.|
|CGT rollover*||If you sell a small business asset and buy a replacement, you can roll over your CGT liability to the value of the replacement asset. This means you won’t pay any CGT owing until you sell the replacement asset.|
|Simpler depreciation rules||You can usually pool your assets to make depreciation calculations easier.
You can also immediately write-off – deduct the full cost in the year you buy them – most depreciating assets that cost less than a certain limit. The limits are:
|Simpler trading stock rules||If the value of your trading stock has not increased or decreased by more than $5,000 over the year, you can choose whether or not to do an end-of-year stock take.|
|Immediate deduction for certain prepaid business expenses||You can claim an immediate deduction for prepaid business expenses if the payment covers a period of 12 months or less and ends in the following income year.|
|Two-year amendment period||The time limit for the Commissioner or the taxpayer to amend an income tax assessment of an individual or small business is two years, instead of the standard four years.|
|Accounting for GST on a cash basis||You don’t need to account for GST on a sale you make until you receive payment for the sale. Equally, input tax credits for purchases can only be claimed when you have paid for the purchase.|
|Annual apportionment of GST input tax credits||If you purchase items you use partly for private purposes, you can claim full GST credits for these on your activity statements. You can then make a single adjustment to account for the private use percentage at the end of the year.|
|Paying GST by instalments||You can pay GST by instalments the ATO calculates for you and can vary this amount each quarter if required.|
|FBT car parking exemption||In some cases you may be exempt from FBT for employee car parking.|
|PAYG instalments based on GDP amount||To save you working out your instalments based on actual income each quarter, all individuals and small business entities can pay fixed quarterly instalment amounts as calculated by the ATO based on their business and investment income in their most recently assessed tax return.|
|Lower company tax rate||Base rate entities pay company tax at 27.5% rather than 30%. The 27.5% rate will reduce to 25% by 2020-22.|
|Small business income tax offset **||Individuals who receive business income other than via a company are entitled to a tax offset.|
Payroll tax is a state tax on the wages paid by employers when the total wages exemption threshold is exceeded. Exemption thresholds vary between states. The definition of wages generally includes employer superannuation contributions and fringe benefits, although the definition also varies between states.
NOTE: Payroll tax is not the same as PAYG withholding tax collected by the Australian Taxation Office (ATO). PAYG is the tax deducted from an employee’s income and forwarded to the ATO.
The following organisations are generally exempt from payroll tax, provided specific qualifying conditions are met:
- Religious institutions
- Public benevolent institutions
- Public or non-profit hospitals
- Non-profit non-government schools
- Charitable organisations
All landowners, except those in the Northern Territory, may be liable for land tax. In the Australian Capital Territory land tax is levied on lessees under a Crown lease, because land generally cannot be acquired under freehold title. Landowners are generally liable for land tax when the unimproved value of taxable land exceeds certain thresholds (excluding the ACT).
In some states, deductions and rebates are available, depending on how the land is used. Principal places of residence are generally exempt from land tax, however this depends on particular qualifying criteria (these vary between jurisdictions).
Land owned and used by the following types of organisations might be exempt from land tax:
- Non-profit societies
- Clubs and associations
- Religious institutions
- Public benevolent institutions
- Charitable institutions
Stamp duty is levied on particular written documents and transactions, including:
- Motor vehicle registrations and transfers
- Insurance policies
- Hire purchase agreements
- Property transfers (e.g. transfer of businesses, real estate, and particular shares)
The stamp duty rate varies according to the type of transaction and its value. Depending on the nature of the transaction, certain concessions and exemptions may be available.
State tax web sites
Particular deductions and exemptions vary between states for all duties. For additional state-specific information, visit the applicable state web site:
- Over the age of 18 (no upper age limit applies)
- Paid $450 or more (before tax) in a calendar month.
- Superannuation Guarantee Charge (SGC) statement and calculator – calculate the SGC liability and prepare the SGC statement.
- Employee/contractor decision tool – determine whether new or existing workers are contractors or employees (for tax and super purposes)
- Superannuation guarantee eligibility decision tool – see whether an employer needs to make super contributions for employees
- Superannuation guarantee contributions calculator – calculate how much super an employee should be contributing for eligible workers.
Taxpayers who do not meet their tax obligations may face penalty or interest charges. To avoid these charges, ensure you pay the full amount of tax you owe by the due date.
The main charges for failing to meet tax obligations are the:
- General interest charge (GIC) – applies to a variety of situations, whenever amounts owing to the Australian Taxation Office (ATO) are paid after the due date.
- Shortfall interest charge (SIC) – applies to a variety of situations where a tax liability is increased in an amended assessment
- Failure to lodge on time penalty (FTL) – administrative penalty which may be applied if a taxpayer fails to lodge a return, statement, notice, or another document with the ATO by the due date.
Additional penalties include failing to:
- Keep or retain required records
- Retain or produce required declarations
- Provide access and reasonable facilities to an authorised tax officer
- Apply for or cancel GST registration when required
- Issue a required tax invoice or adjustment note
- Register as a PAYG withholder when required
- Lodge a required activity statement electronically
- Pay a required amount electronically
If a taxpayer is audited and an amended assessment is raised, further penalties of up to 75% of the additional tax levied may be applied, depending on the severity of the offence. Examples include making a false or misleading statement, not taking reasonable care, or taking a position that is not reasonably arguable in a tax return or other document.
Wine Equalisation Tax (WET) is a tax on wine levied at 29% of the taxable value of wine. The taxing point is the last wholesale sale, or a retail sale or application for own use (e.g. tastings) when there is no wholesale sale. The taxable value is the actual sale price (excluding WET and GST) for wholesale sales, or a notional equivalent value in the other situations.
WET affects wine manufacturers, wholesalers, and importers. Retailers do not have a WET liability unless they make their own wholesale wine. WET is paid as part of the entity’s activity statement, the tax period is the same as the entity’s tax period for GST (which may be monthly, quarterly or annually).
The Producer Rebate scheme entitles wine producers to a rebate of WET for up to $500,000 of domestic sales each financial year. There is a modified producer rebate scheme for New Zealand wine producers.
Generally, WET is included in the price that retailers such as bottle shops and restaurants pay when purchasing wine. The retailer is not entitled to claim back the cost of the WET, as the WET is built into the price the retailer pays and then passed on to the consumer.
WET applies to the following alcoholic beverages:
- Grape wine (including sparkling and fortified wine, marsala, vermouth, wine cocktails, and creams)
- Other fruit wines and vegetable wines (including fortified fruit and vegetable wines)
- Cider and perry
- Mead (including fortified mead) and sake