They say that the only two things certain in life are death and taxes. Well Australia has more than its share of taxes, and that is certain, and given the current political climate we may well have another to deal with before too long. The good news is that there should be some trade offs, but for that we will have to wait and see.
As a new business owner you should be aware that in Australia, under our Federal system, the Commonwealth has the exclusive right to levy customs and excise tax. The Commonwealth Government imposes and collects income tax, although our States can impose income tax if they wish, but by agreement, this has been left to the Commonwealth Government.
In addition the Commonwealth also has the responsibility for collecting sales tax, fringe benefits tax and capital gains tax. The States collect payroll tax, land tax, stamp duties and licence fees. Estate and gift duties have been abolished, however it is pointed out that capital gains tax can catch gifts of assets. Local Government bodies are responsible for rates on property within their respective council areas.
The tax that affects most Australians is Income Tax - Income Tax is that part of your income which you are required to pay to the Commonwealth Government. Income tax is calculated on a set formulae established by the Government of the day from time to time. The amount upon which income tax is payable is arrived at after determining your assessable income less all allowable deductions.
Allowable Deductions - Nexus
Allowable deductions are expenses incurred by the business in producing assessable income. The key in determining tax deductibility is that a nexus must exist between the income and the expense. That is, a relationship must exist between the earning of the income and the incurring of that expense. Expenses that are of a private, domestic or capital in nature are generally not tax deductible.
Current Tax Rates
Individuals and Sole Traders
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