Tax Seminar
Presented by:
HAIER AUSTRALIA PTY LTD
Australia Tax System
Here we talk only on:
Federal Government (Commonwealth) Taxes
Why Taxes are imposed
Government spending
Wealth re-distribution and social stability (Robinhood)
Promote Government Policy
Government builds road, school, hospital etc
To make this country a better place to live
Federal Government
(Commonwealth) Tax
Department
Category of Federal Taxes
Income Tax
Personal & Partnership
Company Pty Ltd & Trust
2. Capital Gain Tax
3. Fringe Benefit Tax
Category of Federal Taxes
4. Goods & Services Tax
5. Other Taxes
a. Land Tax
b. Stamp Duty
1.
Income Tax
a. Individuals
Resident Individual whose total taxable income for the year from all sources exceeds the tax-free threshold of $6,000. 00 are required to lodge a return.
How Taxes are charged
Negative Gearing
. rental loss
Investment
Gain
*Investment
Loss
Work related
Deductions
*Conditions apply
Wages
Capital Gain
Windfall income
ie Lotto
Business Income
x
Taxable
Income
Overseas
Income
Business Loss
Individual Marginal Tax Rate 2007-08
$0-6,000 0%
$6,001-30,000 15%
$30,001-75,000 30%
$75,001-150,000 40%
Over $150,000 45%
#plus % medical levy
Wages
Capital Gain
Windfall income
Business income
Negative Gearing
x
Investment
Gain
*Investment
Loss
Overseas
Income
John
Smith
2007-08
$45,000
Factory
Taxable Income
= $55,300
$10,000
Taxi driver
$1,000
Interest
$6,000
Rio Tinto
Share trading
$3,000
Lotto
-$4,000x50%
Rental property
-$4,000
Telstra Share
-$700
Uniform, tools..
Work related Deductions
*Business Loss
Taxable Income: $55,300
$6000 x 0% = $0
($30,000-$6,000)x15% = $3,600
($55,300-$30,000)x30% = $7,590
Total $11,190
Medicare levy ($55,%) $829
Total Tax Payable $12,019
(appx 22%)
John
Smith
2007-08
Medicare Levy Surcharge
Single - income over $50,000 &
Family- income over $100,000
Taxable income are subject to extra 1% (total %) if there is no private health insurance on hospital cover
Tax
b. Companies
Companies pay a flat rate of tax without a tax free threshold, the rate is 30% since 01 July 2001.
Investment Gain
Capital Gain
Trading Profit
x
Taxable
Income
Foreign Income
Cost of Good Sold
How Taxes are charged
Other Income
Capital Loss
Business
Expenses
Other
Expenses
Investment Gain
Capital Gain
Trading Profit
x
Taxable
Income
= 55,300
Foreign Income
Cost of Good Sold
XYZ Pty Ltd 2007-08
Other Income
Capital Loss
Business
Expenses
Other
Expenses
$500,000
$350,000
$100,000
$10,000
Telstra Share
$45,000
$10,000
Interest Income
$20,000
$10,000
$20,300
BHP Share
XYZ Pty Ltd 2007- 08 Tax
Taxable Income: $55,300
Tax rate 30%
Total Tax Payable $16,590
Man & Wong
2. Capital Gain Tax (CGT)
Capital gain tax is a tax on realisation of the asset acquired after 19 Sep 1985
Capital Gain – Pay tax
Capital Loss – offset the Capital Gain or deferred to offset future gain
Man & Wong
Capital Gain Tax
Calculation Method of CGT
Indexation Method (1985= 1999=)
50% discount method
# on holding over 12 months
Not applied to Companies
Capital Gain Tax -Individuals
Example: John Smith sold his Rio Tinto shares which were owned over 12 months
Sales Proceed $50,000
-) Cost Base
(Purchase price & fees.) $38,000
Profit (after all cost base) $12,000
Apply 50% discount $6,000
Net Capital $6,000
Marginal tax rate 30% $1,800
Capital Gain Tax – Companies
Example: XYZ Pty Ltd Sold the BHP shares in Sep 2007, which was purchased in June 2000.
(50% CGT discount is not available, indexation method is also not available as it was acquired after 21 Sep 1999).
Sales Proceed $50,000
-) Cost Base
(Purchase price & fees.) $29,700 Profit (after all cost base) $20,300
Net Capital $20,300
Tax rate @ 30% $6,090
3. Fringe Benefits Tax (FBT)
FBT is paid by employers on the grossed up taxable value of benefits provided to employees.
- FBT Rate : %
Type 1 Gross up rate :
Applies where the benefit is a GST creditable benefit.
Type 2 Gross up rate:
Applies where the benefit is not a GST creditable benefit.
Example: XYZ Pty Ltd provide John Smith with a car Fringe benefit of $330 and which is a GST taxable supply.
Type 1: (Correct)
FBT payable = $330 x x %
= $
Type 2: FBT payable (Incorrect)
FBT payable = $330 x x %
= $
& Services Tax (GST)
GST applies at the rate of 10% on the supply of most goods, services and anything else, including importations, consumed in Australia after 1 July 2000.
GST free /Input taxed
- basic food
- government fees
- health & medical services
- education, export etc
Registered Entities
To be liable for GST or to claim input tax credits, an entity must normally be registered, or be required to be registered if the entity’s annual turnover is $75,000 or more.
Registered entity need to complete and lodge the Business Activity Statement (BAS) with the ATO Monthly or Quarterly to report their GST position and pay GST payable accordingly.
GST Calculation
XYZ Company (01/09/07-30/09/07) Monthly BAS
- Example 1:
Gross GST
Total sales $110,000 $10,000
Total expenses $66,000 $6,000
Net GST owned to the ATO $4,000
Example 2:
Gross GST
Total sales $66,000 $6,000
Total expenses $110,000 $10,000
Net GST ATO owned to XYZ Pty Ltd $4,000
5. Other Taxes
a. Land Tax
Land tax is an annual tax assessed to the owner of the Land, It is imposed by all states and is normally based on ownership or use of the land. However, the legislation may vary from state to state.
For example: New South Wales
Land tax is generally payable where the value of a taxpayer’s landholdings in New South Wales exceeds the tax threshold. The Tax threshold for the 2007 land tax year is $352,000.
Normally, in New South Wales, land values for calculation land tax are ascertained annually.
For example: New South Wales
Land Tax Exemptions:
Owner’s principal place of residence
Primary production land
Owners’ are : Religious societies, non-
profit societies, charitable institutions, etc
Land used and occupied primarily
Land Tax Calculation (NSW)
Taxable value of land $ Land tax payable
Not more than 352,000 Nil
More than 352,000 100 + % of the excess over 352,000
For example: if the value of a land is $400,000, and then the land tax is: $100+ $816=$916
5. Other Taxes
b. Stamp Duty
Stamp duty is a state and territory tax controlled by eight separate jurisdictions and imposed on a fixed rate on the value of the transaction involved. And it is quite complexity. It is same as land tax that the legislation may vary from state to state.
Stamp duty should be by purchaser for the conveyance of real property.
Dutiable Property:
Land
Certain shares and units in unit trust
schemes
Goodwill of a business
Partnership interest
Options to purchase land
Certain intellectual property, etc
Stamp Duty Calculation (New South Wales)
Value $ Rate
0- 14,000 %
Over 14,000-30,000 $175 plus % of the excess over$14,000
Over 30,000-80,000 $415 % of the excess over of $30,000
Over 80,000-300,000 $1,290 plus % of the excess over of $80,000
Over 300,000- 1,000,000 $8,990 plus % of excess over of $300,000
Over 1,000,000-3,000,000 $40,490 plus % of excess over of $1,000,000
Over 3,000,000 $150,490 plus 7% of excess over $3,000,000
Note: applies to residential properties only. Non – residential properties continue to use %.
For example: John Smith Purchase a property for the amount of $600,000, and then the stamp duty will be $22,490.
End of Seminar
Questions ???
