Skip to main content

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.

Leave a Reply

SafeSend - a safe and easy solution for your tax engagements! Learn More >>
+