Taxation
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Australia is the sixth-lowest taxing nation among the 31 member countries of the OECD.1
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Most taxation is centralised, and generated from incomes — wages, salaries, payrolls and profits.
Australia has the third-lowest level of total taxation on personal income in the OECD.2
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Australia is one of two OECD countries that does not have a social security tax.3 However, there is a Superannuation Guarantee at 9% of an employee’s gross wage.
Other taxes include goods and services, property tax, and customs and excise.
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Fast, efficient system
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According to 2010 World Competitiveness Yearbook, Australia ranks ahead of the USA, New Zealand, the United Kingdom for fiscal policy efficiency.4 A key element of this has been the move to online transactions, enabling faster processing times and refunds.
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Corporate income tax
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Australia’s corporate tax rates are competitive when compared with those of other developed nations.
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The maximum business rate of 30% is equal to Spain and New Zealand, and lower than Canada and Germany (31%) and the USA (35%). There are no state or municipal taxes on company income.
Global comparisons of real corporate tax rates show Australia outperforming the USA, New Zealand, France and the United Kingdom. 5
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The Australian Government is committed to ongoing reform to ensure Australia’s tax system remains internationally competitive. One of the first reforms announced from a major review of the tax system, the Henry Review, is a phased reduction in the corporate tax rate to 29%.
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Goods & Services Tax (GST)
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At 10%, Australia’s consumption tax (GST) is one of the lowest in the OECD. It is payable on the importation of any goods in to Australia. The end user of any goods or services bears the cost.
The Australian taxation system offers a series of tax concessions, offsets and incentives to help business and industries prosper.
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Payroll tax
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All Australian states and territories apply tax on wages – or payroll tax - at differing rates. Victoria charges the second-lowest rate in Australia: 4.9% after wages reach a threshold of $550,000. Businesses with a payroll between $4 million and $13.5 million pay the lowest rate in the country. 6
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Double tax agreements
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To ensure foreign companies are not taxed twice, Australia has a double tax agreement with more than 40 countries. These include China, Malaysia, India, Japan, the United Kingdom, the USA, and New Zealand.
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Advice
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Invest Victoria can put you in contact with taxation specialists that provide advice on the full range of tax liabilities, and the most effective corporate structure for your company.
Your company can make substantial cost savings fully evaluating the various structural and accounting options at the very initial stages of establishment.
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1 IMD 2010 World Competitiveness Yearbook, Collected Total Tax Revenues consolidated rankings. Brisbane’s IPA promo material has Australia as 10th in the OECD, but doesn’t source that figure.
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2 Pocket Guide to the Australian Taxation System, Dept of Treasury, Dec 2009, http://www.treasury.gov.au/documents/866/PDF/Pocket_tax_guide_200910_MYEFO_20091223.pdf
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3 Pocket Guide to the Australian Taxation System, Dept of Treasury, Dec 2009, http://www.treasury.gov.au/documents/866/PDF/Pocket_tax_guide_200910_MYEFO_20091223.pdf
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4 IMD 2010 World Competitiveness Yearbook 2010, Fiscal Policy consolidated rankings. Australia ranked No. 19
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5 IMD 2010 World Competitiveness Yearbook 2010, Real Corporate Taxes. Australia is 5.17
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6 From Taxation in Australia factsheet
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