MBA Australia

Taxes in Australia


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In general way, 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%. Generally, capital gains are only subject to tax at the time the gain is realised.

In Australia the Financial Year is from July 1st to June 30th the following year (e.g. 1 July 2005 - 30 June 2006 is the 2006 financial year).

Personal Income Tax, Each person in Germany is obliged of paying the taxes on his income as an employee and on income as a self-employed person. An individual who meets the test of a "permanent resident" of Germany will have the tax calculated on his income in this country and from overseas. The income tax for those on the lowest rung now stands at 15 percent and the top rate is 42 percent. The fundamental to remember is that anyone taking up residence in Germany or who has their customary place of abode in the country will subject to an unlimited tax liability on their worldwide income. While you can be resident in more than one country, for the purposes of paying tax in Germany, your customary place of abode means living at an address for more than six months.

In Australia income taxes are withheld from wages and salaries, frequently are refunds payable to taxpayers. A nine-digit Tax File Number, that is issued to you only one for your lifetime, must be quoted to employers for employees to have withholding calculated using the various tax brackets. In the lack of this number employers are required to withhold tax at the highest marginal rate from the first dollar. In the same way, banks must also withhold the highest marginal rate of income tax on interest earned on bank accounts if the individual does not provide their tax file number to the bank.

Company Tax, Australian companies are taxed at a flat company tax rate of 30%, though through the Dividend imputation system Australian residents effectively do not pay this company income tax upon the profits distributed as dividends by Australian-resident corporations.

Capital Gains Tax, The Capital Gains Tax (CGT) is part of the income tax system rather than a separate tax. This tax is charged on capital gains, the profit realized on the sale of an asset that was purchased at lower price. The most common capital gains are realized from the sale of goods, stocks, bonds, precious metals and property.

Family Tax Benefit, For families with dependent children the income tax system includes a supplementary set of rules known as Family Tax Benefits (FTB) that are applied in a more complex way. The benefits and thresholds for FTB vary depending on the estimation of your annual family income, the number of children and which of the married partners earns the additional income. The person who is working on a self-employed basis such as in a profession or in a trade he faces a rather more complicated system. This generally means that his earnings in Germany will be subject to "Mehrwertsteuer" or "MwSt" (value added tax). The "MwSt" scale will largely depend on his profession or income earning activities.

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Money & Finance in Australia
MBA Australia