Tax on property income 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.

INCOME TAX

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

INCOME TAX FOR FOREIGN RESIDENTS

TAXABLE INCOME, AUD (US$) TAX RATE
Up to 120,000 (US$82,686)  32.50%
120,001 – 180,000 (US$124,029) 37,5% on band over AUD120,000
Over 180,000 (US$124,029) 45% on all income over AUD180,000
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).

NEW SOUTH WALES - LAND TAX

TAX BASE, AUD (US$) TAX RATE
Up to 549,000 (US$422,308) AUD100 (US$77)
549,000 - 3,357,000 (US$2,582,308) 1.6% on band over US$422,308
Over 3,357,000 (US$2,582,308) 2% on all value over US$2,582,308
Source: Global Property Guide

NEW SOUTH WALES - LAND TAX 2016

TAX BASE, AUD (US$) TAX RATE
Up to 482,000 (US$370,769) AUD100 (US$77)
482,000 - 2,947,000 (US$2,266,923) 1.6% on band over US$370,769
Over 2,947,000 (US$2,266,923) 2% on all value over US$2,266,923
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 2009-2021:

VICTORIA - LAND TAX 2009-2021

TAX BASE, AUD (US$) TAX RATE
Up to 250,000 (US$192,308) 0%
250,000 - 600,000 (US$461,539) 0.20% on band over US$192,308
600,000 - 1,000,000 (US$769,231) 0.50% on band over US$461,539
1,000,000 - 1,800,000 (US$1,384,615) 0.80% on band over US$769,231
1,800,000 - 3,000,000 (US$2,307,692) 1.30% on band over US$1,384,615
Over 3,000,000 (US$2,307,692)

2.25% on all value over US$2,307,692

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 2016 - 2017 FOR RESIDENTIAL PROPERTIES

TAX BASE, AUD (US$) TAX RATE
Up to 75,000 (US$57,692) 0.41%
75,000 - 150,000 (US$115,385) 0.48% on band over US$57,692
150,000 - 275,000 (US$211,539)

0.61% on band over US$115,385

Over 275,000 (US$211,539) 1.23% on all value over US$211,539
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.