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Individual Tax

Australian residents are taxed on their worldwide income from all sources.  Foreign residents, however, are generally only taxed on their Australian-sourced income (i.e. money they earn while working in Australia).

The rates of tax applicable to Australian resident individuals in AUD are as follows:

Taxable income Tax on this income
0 – $18,200 $0
$18,201 – $37,000 19% for each $1 over $18,200
$37,001 – $80,000 $3,572 plus 32.5% for each $1 over $37,000
$80,001 – $180,000 $17,547 plus 37% for each $1 over $80,000
$180,001 and over $54,547 plus 45% for each $1 over $180,000

*The above rates do not include the Medicare levy of 2%

Corporate Tax

  • The four main business structures used by businesses in Australia are sole traders, partnerships, companies, and trusts.
  • A company that is limited by and capitalized with shares is the most commonly formed type of company in Australia. It is a separate legal entity with the legal capacity of a natural person. Businesses may be managed through either a private (proprietary) company or a public company (one with over 50 shareholders)
  • Companies registered in a foreign jurisdiction can also register with the ASIC to conduct business in Australia, either using an Australian branch office or subsidiary company. Foreign companies must establish a registered office in Australia and appoint at least one Australian director.
  •  The corporate tax rate in Australia is currently a flat rate of 30%, which will be reduced to 28.5% beginning on July 1, 2015.

Withholding Tax

If you pay interest, dividends or royalties to a foreign resident (someone who is not an Australian resident), the gross amount of each of those payments is generally subject to a withholding rate of:

Default Withholding Tax Rate Reduced Treaty Rates between Australia & the US
Interest 10% 10%
Dividends 30% 15%
Royalties 30% 5%

Other Taxes

  • The Australian Goods and Services Tax (GST) is similar to the European Union’s VAT system.  It executes a tax of 10% on the price of most goods and services that are consumed or supplied in Australia.
  • GST is payable on the majority of goods that are imported to Australia.  However, goods and services that are exported from Australia are generally GST-free.
  • Any entity that runs a business can voluntarily register for GST, but if a business has an annual turnover that exceeds AUD 75,000, it is then required to register for GST.

Owning Property in Australia

  • Your home is generally exempt from tax, unless you own investment property, renovate or build a property for profit, or use a property for running a business. In these events, there may be possible implications for capital gains tax, income tax, and goods and services tax (GST).
  • Vacant land is generally considered a capital asset that is subject to capital gains tax.
  • One large difference between Australia and the U.S. is that you can deduct your home mortgage interest in the U.S., but you cannot deduct your home mortgage interest in Australia.

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