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Oct 09, 2014

Taxes are high in Australia


INDIVIDUAL TAXATION

Nonresidents are taxed only on their Australian-sourced income. Married couples are taxed separately.

The tax year in Australia starts at 01 July and ends on 30 June the following year.
The tax year 2013-2014 is from 01 July 2013 to 30 June 2014. The tax year 2014-2015 is from 01 July 2014 to 30 June 2015.

INCOME TAX

Income is taxed at progressive rates. Nonresident individuals are subject to tax at the following rates:

INCOME TAX 2014-2015 FOR NON-RESIDENTS

TAXABLE INCOME, AUD (US$) TAX RATE
Up to 80,000 (US$69,565) 32.50% on band over US$32,174
80,000 – 180,000 (US$156,522) 37% on band over US$69,565
Over 180,000 (US$156,522) 45% on all income over US$156,522
Source: Global Property Guide

INCOME TAX 2013-2014 FOR NON-RESIDENTS

TAXABLE INCOME, AUD (US$) TAX RATE
Up to 80,000 (US$69,565) 32.50% on band over US$32,174
80,000 – 180,000 (US$156,522) 37% on band over US$69,565
Over 180,000 (US$156,522) 45% on all income over US$156,522
Source: Global Property Guide

RENTAL INCOME
Expenses that can be claimed are advertising costs (for tenants), bank charges, body corporate fees, borrowing expenses, council rates, depreciation (decline in value of depreciating assets), insurance, land tax, property agent fees or commissions, repairs and maintenance (stationery, telephone, water charges, gardening and mowing, pest control), and travel undertaken to inspect the property or to collect the rent.

CAPITAL GAINS
Capital gains on the disposal of assets are liable to tax at the standard income tax rates. The capital gain is computed by deducting the ‘cost base’ from the gross selling price or fair market value of the property when it was sold.

The ‘cost base’ of the property is the sum of the following amounts:

  • acquisition cost of the property,
  • incidental expenses of buying and selling the property,
  • improvement costs, and
  • non-capital costs of ownership of an asset acquired on or after 21 August 1991 (e.g. interest on borrowing to purchase the asset, rates and land taxes, repair and maintenance expenditure) to the extent that these are not otherwise deductible

Indexation
The cost base of the property sold within one year of acquisition cannot be indexed. Otherwise, the cost base can be indexed (except for non-capital costs of ownership of an asset). The indexation method that can be applied depends on the date the property was acquired.

  • For assets acquired by individuals on or after 21 September 1999, the unindexed capital gain (known as discount capital gain) is reduced by 50%. The taxable capital gains are 50% of the cost base.
  • For assets acquired before 21 September 1999, the cost base was indexed according to movements in the consumer price index and indexation is frozen as at 30 September 1999.

PROPERTY TAX


LAND TAX

Land tax is an annual tax, levied on all real estate properties, payable by the owner. Exemptions to land tax are extended in most states, to a person’s primary place of residence, and to farms. The tax base is the assessed value of the property.

Australia new south wales property

New South Wales

Land tax is levied on owners of land; exemptions are extended to homes (principal place of residence), incidental business premise (i.e. home office), permitted occupancies (renting out two rooms in your primary residence) and farms (land use for primary production).

The tax threshold is AUD412,000 (US$358,261) and the premium land tax threshold is AUD2,519,000 (US$2,190,435).  The tax due is AUD100 (US$86) plus 1.6% levied on the value exceeding the threshold amount up to the premium threshold amount, and 2% thereafter.

NEW SOUTH WALES - LAND TAX

TAX BASE, AUD (US$) TAX RATE
Up to 412,000 (US$358,261) AUD100 (US$86)
412,000 – 2,519,000 (US$2,190,435) 1.6% on band over US$358,261
Over 2,519,000 (US$2,190,435) 2% on all value over US$2,190,435
Source: Global Property Guide

Victoria

Land tax is levied on the total taxable value of all owned land in Victoria. Exemptions apply to a person’s primary place of residence as well as land used for primary production. Properties valued up to AUD250,000 (US$251,475) are exempt from taxation. However, for properties exceeding the threshold amount, the following land tax rates apply for 2009-2014:

VICTORIA - LAND TAX 2009-2014

TAX BASE, AUD (US$) TAX RATE
Up to 250,000 (US$217,391) 0%
250,000 – 600,000 (US$521,739) 0.20% on band over US$217,391
600,000 – 1,000,000 (US$869,565) 0.50% on band over US$521,739
1,000,000 – 1,800,000 (US$1,565,217) 0.80% on band over US$869,565
1,800,000 – 3,000,000 (US$2,608,696) 1.30% on band over US$1,565,217
Over 3,000,000 (US$2,608,696)

2.25% on all value over US$2,608,696

Source: Global Property Guide

Australia Capital Territory

Land tax applies to all rateable premises including residential properties that generate income through rent. Land tax rate is different for commercial premises and residential rental properties.

ACT - LAND TAX 2014 - 2015 FOR RESIDENTIAL PROPERTIES

TAX BASE, AUD (US$) TAX RATE
Up to 75,000 (US$67,217) 0.41%
75,000 – 150,000 (US$130,434) 0.48% on band over US$67,217
150,000 – 275,000 (US$239,130)

0.61% on band over US$130,434

Over 275,000 (US$239,130) 1.23% on all value over US$239,130
Source: Global Property Guide

CORPORATE TAXATION

INCOME TAX

Corporate income tax is levied on: (1) sale of goods, (2) provision of services, (3) dividends, interest, royalties, rent, and (4) capital gains. Income and capital gains earned by companies are taxed at the flat corporate tax rate of 30%. Income-generating expenses are deductible when calculating taxable income.

Corporate income tax rate is scheduled to fall to 29% for tax year 2013-2014 & to 28% for tax year 2014-2015.






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