Income Tax Rates Residents 2017 | ||
Income Bracket $ | Tax Payable $ | Marginal Tax Rate |
0 – 18,200 | Nil | Nil |
18,201 – 37,000 | Nil plus | 19% of excess over $18,200 |
37,001 – 87,000 | $3,572 plus | 32.5% of excess over $37,000 |
87,001 – 180,000 | $19,822 plus | 37% of excess over $87,000 |
180,001 + | $54,232 plus | 47% of excess over $180,000 |
Income Tax Rates Residents 2016 | ||
Income Bracket $ | Tax Payable $ | Marginal Tax Rate |
0 – 18,200 | Nil | Nil |
18,201 – 37,000 | Nil plus | 19% of excess over $18,200 |
37,001 – 80,000 | $3,572 plus | 32.5% of excess over $37,000 |
80,001 – 180,000 | $17,547 plus | 37% of excess over $80,000 |
180,001 + | $54,547 plus | 47% of excess over $180,000 |
Income Tax Rates Residents 2014 | ||
Income Bracket $ | Tax Payable $ | Marginal Tax Rate |
0 – 18,200 | Nil | Nil |
18,201 – 37,000 | Nil plus | 19% of excess over $18,200 |
37,001 – 80,000 | $3,572 plus | 32.5% of excess over $37,000 |
80,001 – 180,000 | $17,547 plus | 37% of excess over $80,000 |
180,001 + | $54,547 plus | 45% of excess over $180,000 |
Income Tax Rates Residents 2015 | ||
Income Bracket $ | Tax Payable $ | Marginal Tax Rate |
0 – 18,200 | Nil | Nil |
18,201 – 37,000 | Nil plus | 19% of excess over $18,200 |
37,001 – 80,000 | $3,572 plus | 32.5% of excess over $37,000 |
80,001 – 180,000 | $17,547 plus | 37% of excess over $80,000 |
180,001 + | $54,547 plus | 47% of excess over $180,000 |
Per Kilometre Rates 2015 | ||
Conventional Cars (Engine Capacity) | Rotary Driven Cars (Engine Capacity) | Rates (cents) Per Kilometre |
Up to 1600 cc | Up to 800cc | 65.0 |
1601-2600 cc | 801 – 1300 cc | 76.0 |
Over 2600 cc | 801 – 1300 cc | 77.0 |
HELP – Higher Education Loan Programme 2014/15 | |
Below $53,345 | Nil |
$53,345 – $59,421 | 4.0% |
$59,422 – $65,497 | 4.5% |
$65,498 – $68,939 | 5.0% |
$68,940 – $74,105 | 5.5% |
$74,106 – $80,257 | 6.0% |
$80,258 – $84,481 | 6.5% |
$84,482 – $92,970 | 7.0% |
$92,971 – $99,069 | 7.5% |
$99,070 and above | 8.0% |
Vehicles with a sales value of $61,884 or more are subject to a flat 33% luxury car tax.
Some fuel efficient cars are subject to a higher limit of $75,375.
Mv per klm rates
Capital Gains Tax (CGT) is a component of income tax that applies if you make a profit due to the sale of certain assets such as an investment property, or shares. You may have an increased income tax liability because your assessable income includes any net capital gain or loss you made for the year. CGT applies whenever an asset that you own is disposed of and causes certain events or transactions to happen. These events or transactions are referred to as CGT events. Generally, an asset you acquired before 20 September 1985 is exempt from CGT.
Most CGT events involve disposal of a CGT asset. The sale of an asset is simply one of many CGT events that can produce a capital gain or loss. Some of the more common CGT events or situations that may produce a capital gain or loss include: an asset you own being destroyed or given away, shares you own are cancelled, surrendered, redeemed or declared worthless by a liquidator, you receive a non-assessable distribution from the trustee of a unit trust or you enter into an agreement not to work in a particular industry for a set period of time.
There are three methods that you can use to calculate your capital gain or loss. These are: indexation method, discount method and other method. Both the indexation and discount method can only be used for assets that have been held for 12 months or more. The indexation method allows you to increase the cost base by applying an indexation factor based on the CPI. The discount method allows you to discount your capital gain by 50%. The other method is the method you use when the asset has been held for less than 12 months. It is simply a subtraction of the cost base from the capital proceeds.
Yes. There are several concessions available to small businesses that can greatly reduce the amount of tax that will be payable on the sale of a qualifying asset. Typically, these assets are referred to as active assets. You will need professional advice on whether an asset qualifies as an active asset.
The concessions take the form of rollover relief, a further 50% reduction and retirement exemptions. The concessions can in some cases be combined to provide a particularly favourable tax outcome. Refer to the table under small Business Entity concessions, question 2 SBE.
Value shifts change the relationship between the market value and tax value of an asset that would usually give rise to a capital gains tax liability. Most value shifts happen when parties do not deal at the market value, causing one or more assets to decrease while the other assets value increases. Value shifts occur in the form of:
Without a value-shifting regime in place there can be artificial losses and deferred gains. Where the value shifting legislation applies, you may need to adjust the tax values of an interest affected by the value shift, or adjust a realised loss or gain. In some cases there may be an immediate capital gain.
In general, the value shifting rules do not apply to small value shifts that fall within the de minimis rules.
A person carrying on business must keep records that record and explain all transactions and other acts engaged in by the person. Records to be kept include any documents that are relevant for the purpose of ascertaining the person’s income and expenditure, and particulars of any election, estimate, determination calculation made for the purposes of the Act including the basis or method upon which any estimate or calculation is based. Forms of record keeping include:
All business records are required to be kept for a minimum two years for a qualifying small business, five years for other businesses and seven years for the statute of limitations.
The small business entity concessions (SBE) offer concession to qualifying small businesses with a turnover of less than $2 million and assets of less than $6 million. It is an alternative method of determining taxable income for eligible small businesses with straightforward financial affairs.
Similar concessions were available under the STS (Simplified Tax System) which no longer operates and has been superseded by the SBE concessions.
A summary of the major concessions are set out below.
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.
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, approved deposit 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 will not pay any CGT owing until you sell the replacement asset.
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.
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.
Paying GST by instalments: You can pay GST by instalments the ATO calculates for you and can vary this amount each quarter if required.
Simpler depreciation rules: You can usually pool your assets to make depreciation calculations easier. You can also claim an immediate deduction for most assets that cost less than $1,000. There is a temporary limit of $20,000 until 30 June 2017.
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.
Special rules for deducting prepaid expense: You can claim a deduction for prepayments made up to twelve months ahead.
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 how much you need to pay, as of 1 July 2009, a company or superannuation fund that is a small business entity can pay quarterly instalment amounts as calculated by the ATO based on their business and investment income in their most recently assessed tax return.
You cannot claim the cost of normal trips between home and work because the expense is private, unless you have to carry bulky tools or equipment that you use for your work, your home is a base of employment, or you regularly work at more than one site each day before returning home.
You can claim the cost of using your car to travel from your normal workplace to an alternative workplace and from your home to an alternative workplace for work purposes and then to your normal workplace or directly home. You can use one of 2 methods to claim car expenses. These are cents per kilometre method and logbook method.
You can use the cents per kilometre method to claim a maximum of 5,000 business kilometres per car even if you have travelled more than 5,000 business kilometres. You do not need written evidence if you use this method but you may need to be able to show how you worked out your business kilometres.
You can use the logbook method to claim a deduction for car expenses. If you use this method you need to have retained a logbook for 12 weeks to calculate the business use percentage, you need odometer readings for the start and end of the period that you owned or leased the car and can claim fuel and oil based on these readings.
Choose the method that results in the largest deduction as long as you have the required evidence for that method.
Participation in the SBE is optional. You can choose to enter any part of the SBE and there is no requirement to complete a formal election.
If you do choose to enter the SBE depreciation concessions, you must use all three elements, where they apply. Under the SBE there is a single pool: the general pool. Assets in the general pool are depreciated at the rate of 30% (you can claim a deduction at half the pool rate for the first year that the depreciating assets is used or installed ready for use).
Depreciating assets acquired prior to entering the pool that cost less than, or had an adjustable value of less than $6,500 must be immediately written off.
For the 2012-13 income year onwards, small businesses that purchase a vehicle can now also claim and additional deduction of up to $5,000 in the income year it is puchased.
Where the vehicle is used exclusively for business and has not been written off immediately under the instant asset write off, the cost of the motor vehicle is added to the general pool and the deduction is made up of $5,000 plus 15% of the vehicles remaining value.
If you stop being an SBE taxpayer, general or long life SBE pool deductions continue in the same way as when you were in the SBE. However, no new assets can be added to these SBE pools unless you re-enter the SBE. While you are not in the SBE, any new assets must be deducted under the UCA provisions. You can no longer claim an immediate deduction for low cost assets. Also if you had elected onto the cash accounting system under the old STS rules, you must revert to the accruals accounting system.
You are able to offset a loss from a business activity against other income if the activity passes at least one of four tests. You may claim the loss where the activity:
An additional test added in the May federal Budget 2009 is that income from other sources must not exceed $250,000.
If an activity does not pass any of the above tests, a loss can still be claimed if the Commissioner exercises discretion.
If your business activity is a professional arts business and it qualifies for the exclusion you can claim a loss from that activity without needing to pass one of the tests. Professional arts businesses include literary, dramatic and musical or artistic work.
If an activity does not satisfy any of the tests and the commissioner does not exercise the discretion, you cannot offset a loss from that activity against any of your other assessable income for that income year. The loss is deferred.
If your activity makes a profit in a following year, you can offset the deferred loss against this profit, but only to the extent of that profit.
You can only offset the deferred loss against income from sources other than your business activity if, in a following year, the business activity passes one of the four tests or the Commissioner exercises the discretion.
PSI is Personal Services Income. It is mainly a reward for an individual’s personal exertion efforts or skills. It does not include income that is mainly for supplying or selling goods generated by an income-producing asset, for granting a right to use property or generated by a business structure.
If you earn PSI, you will meet the results test in an income year if, for at least 75% of this income, you can answer yes to all of the following questions:
You will meet the unrelated clients test in an income year if you can answer yes to the following question: does the individual doing the personal services work have personal services income from two or more clients who are not associated with each other or with you?
The personal services must also be provided as a direct result of making offers to the public. If you are a commission agent you will meet the unrelated clients test if you satisfy all the special rules for commission agents and the requirements of the unrelated clients test.
Fringe benefits tax (FBT) is paid on particular benefits employers provide to their employees or their employees’ associates instead of salary or wages. Benefits can be provided by an employer, an associate of an employer, or a third party by arrangement with an employer. An employee can be a former, current, or future employee.
FBT is separate from income tax and based on the taxable value of the various fringe benefits provided. The FBT year runs from 1 April – 31 March.
The main classifications of benefits that are tax able are:
The following are not fringe benefits:
You can reduce the amount of FBT you pay by:
Fuel rebate schemes provide rebates 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 Program – Helps cut fuel costs by providing a credit for the fuel tax (excise duty) included in the price of fuel, when used for particular activities. Most businesses can claim fuel tax credits, although the rate varies according to activity. You must be registered for GST as well as fuel tax credits to claim fuel tax credits using your business activity statement (BAS).
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).
Energy Grants Credits Scheme – Provides a fuel grant for businesses using alternative fuels for road transport. You can’t claim an energy grant for diesel but you may be eligible for a fuel tax credit. Product Stewardship for Oil (PSO) Program – Supports recycling oil for environmental sustainability. This includes recycling used oil and using recycled oil.
Pay As You Go (PAYG) Instalments is a system for paying instalments during the income year towards your expected tax liability on your business and investment income. Your actual tax liability is worked out at the end of the income year when your annual income tax return is assessed. Your PAYG instalments for the year are credited against your assessment to determine whether you owe more tax or are owed a refund.
Companies also have to pay PAYG instalments, and the Australian Taxation Office (ATO) notifying them of their instalment rate. This is calculated according to information in the company’s last assessed income tax return.
PAYG instalments are generally paid quarterly, however some taxpayers pay two instalments a year and some have an annual instalment option. The annual instalment is a single, lump sum payment of your PAYG liability for the year. If your company is not eligible to pay an annual instalment, you can pay PAYG instalments quarterly. Each quarter the ATO will send you an activity statement. The due date for lodging this and paying any amounts due will be printed on the statement. This is also the case if you choose the 2-instalment option, which applies to some primary and special professionals such as sports professionals and authors.
Some companies pay an instalment amount calculated by the ATO, but most companies work out their own instalment amount based on their instalment rate multiplied by their business and investment income. The main advantage of working out your own instalment amount is that your instalments are based on your income as you earn it, instead of a projection based on your previous tax situation.
You need to withhold payment amounts:
If you are an employer or run a business and withhold amounts from payments, you need to:
Compulsory superannuation guarantee contribution is payable. It requires you to pay super for your eligible employees, contribute to the correct super funds, and pay contributions by the set date each quarter. Employee has the ordinary common law meaning. The minimum super amount you are required to pay is 9.5% of each eligible employee’s earnings base (usually their ordinary time earnings).
You are generally required to pay super for your employees if all these descriptions apply to them:
You also have to pay super for any employee if all these descriptions apply to them:
Medicare is the scheme that gives Australian residents access to health care. To help fund the scheme, resident taxpayers are subject to a Medicare levy. Normally your Medicare is calculated at 2% of your taxable income. A variation to this calculation may occur in some circumstances. In some circumstances you may be exempt from the levy or it may be reduced.
Payroll tax is a state tax raised by the New South Wales Government on the wages paid by employers when the total wages exemption threshold is exceeded. Exemption thresholds vary between states but the New South Wales rate threshold is $750,000.
Some organisations are generally exempt from payroll tax, provided specific qualifying conditions are met, including religious institutions, public benevolent institutions, public or non-profit hospitals and non profit non-government schools and other charitable organisations.
Stamp duty is levied on certain written documents and transactions and some oral transactions, including:
Merely because an agreement is not in writing does not mean it can avoid stamp duty.
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.
If you are carrying on a business and your annual turnover is greater than $75,000, you are required to register for GST.
There are two types of sales on which GST is not charged, these include sales of GST free goods and services and sales of input taxed goods and services. Whether GST is charged depends on the nature of the sale or transaction.
Input taxed goods and services include financial services such as bank and credit union accounts, superannuation, life insurance, securities such as shares or debentures; residential premises by way of lease, hire or licence other than a lease, hire or licence for at least 50 years; sales of real property to be used predominantly for residential accommodation for sale, other than commercial residential purposes or new premises; sales of food at non-profit school tuckshops and charity fund raising events; and precious metals at any stage after the refined metal has first been sold to a dealer.
If you purchase inputs solely for business purposes relating to the sale of taxable or GST free sales, you are entitled to a GST credit for the full amount of the GST paid on the input. You are not entitled to GST credits for acquisitions relating to the sale of input taxed supplies.
If your turnover does not exceed $2,000,000 or if you are a charity, you can account for GST on a cash basis. Under this method, you become liable for GST when payment is received from customers. You get the benefit of GST credits when you pay for goods or services purchased. You can also account for GST on a cash basis if you get approval from the Tax Office.
If unable to account for GST on a cash basis, you have to account for GST on an accruals basis invoice method. Under this method you are liable to pay GST when you issue an invoice to a customer or otherwise receive payment from a customer, whichever is earlier.
You pay GST on a monthly basis if you have annual turnover of more than $20,000,000, are going to carry on a business for less than 3 months, have a history of failing to comply with your tax obligations or have an income year different to your financial year.
If you do not fall into the above criteria, you may choose whether you wish to pay GST on a monthly basis or in quarterly tax periods. However you may be allowed to make more frequent smaller payments.
The main documents you need to either complete or obtain include GST registration, Business Activity Statement (BAS), Tax Invoices issued or received and Adjustment notes.
Under the invoice method, you are liable to GST on a sale when you issue an invoice or payment is received immediately on issue of the invoice. You may be required to pay GST to the Tax Office on the sale of a good or service before payment is received from the customer and this may cause a cash flow crisis. The most effective strategy is to review trade terms with your suppliers and customers so that payment is received in the same period as GST liability arises.
Where the parties to the contract agree that the purchase of the business is the sale of a going concern, no GST is payable on the purchase price.
Indicators of a going concern include:
There are rulings supplied by the ATO that provide further information on what is a going concern.
The GST treatment of a real estate transaction depends on the type of real estate that is being sold. Generally, there is no GST on the sale of residential premises, except where it is the initial supply of the property and it has not been occupied previously.
Commercial property is generally subject to GST. There may be an exception if there is a lease in place. There is also an exception called the margin scheme that may reduce the amount of GST payable on the transaction in certain circumstances.
A vendor of real property may choose to apply the margin scheme to confine the amount of GST payable to GST on the margin. The margin represents the amount which the consideration for the supply exceeds the consideration for the previous acquisition of the land by the vendor (or if the vendor acquired the land before 1st July 2000, the value as at the 1st July 2000). For example assume the vendor held land as at 1st July 2000 and at that date the land was valued at $1 million. The vendor sells the land at a later date for $1.2 million. The vendor need return GST only on the difference between the consideration of the sale and the valuation of the land as at 1st July 2000, i.e. on $200,000.