Accounting and tax
- A company is considered resident in Australia i) if it is incorporated in Australia, ii) if it conducts business in the country and it is managed and controlled from Australia or iii) if conducts business in the country and its voting power is controlled by Australian resident shareholders;
- Resident companies are taxed on the worldwide income. Non-resident companies are taxable only on their Australian sourced income;
- Companies in Australia pay corporate tax at i) a reduced rate of 27.5% if the annual turnover is less than AU$50 million in the 2018-19 Income year or ii) 30% otherwise. Tax returns must be filed annually before i) January the 15th by companies with turnover over AU$10 million or ii) February the 28th for other companies;
- The standard GST rate is 10%. Registration is mandatory for companies with GST turnover (gross income minus GST) of AU$75,000. GST returns are to be submitted on a quarterly basis, except for businesses with over AU$20 million of turnover which must return their filings every month;
- Dividends received by resident shareholders are not taxable as they are sourced from profits that have already been subject to Australian tax at the company level, while for non-residents it is taxed at 30%;
- Capital Gain Tax rate is 30% for residents and 27.5% for non-Residents;
- With effect from 1st July 2016, if you invest in a qualifying Early Stage Innovation company (ESIC), you may be eligible for tax incentives, such as Concessional Capital Gains Tax and Carry forward tax offset, which would equal to 20% of the amount paid for newly issued shares in an ESIC;
- State, territory and local governments do not impose additional corporate tax, which comes into consideration when tax planning in Australia. However, they so impose some taxes which might impact foreign companies operating in the country, including payroll tax (more applicable to larger employers), stamp duty and land tax.
- Dividends paid to both Australian and foreign parent companies are withholding tax-exempt, provided corporate tax has been paid on the subsidiary’s profits. If otherwise, withholding tax is levied at the standard corporate tax rate, unless reduced by a tax treaty;
- Interest paid to foreign entities are subject to a 10% withholding tax, unless reduced by a tax treaty;
- Australia has a broad treaty network which provides relief from Double taxation on all types of Income;
- Sales and transfers of real estate are subject to a property tax levied at rates fixed by local authorities and of up to 7%.
- Employers must pay contributions to the Social Security and Unemployment Insurance Fund representing 9.5% of their employees’ gross salaries. They must also pay a 46% tax on all fringe benefits provided to their workforce;
- Employers are required to withhold payroll tax due on all employees’ wages and benefits. Averaging 5.5%, payroll tax rates are fixed by local authorities.
Personal income tax
- Personal income tax in Australia is based on a progressive tax rate, which can come up to 47% (including a Medicare levy of 2%). The financial year for personal income tax spans from 1st July to the 30th of June;
- For the year of 2017/2018 the prevailing tax rate is:
- AU$1 – AU$18,200: not required to pay tax;
- AU$18,201 – AU$37,000: 19c for each AU$1 over AU$18,200;
- AU$37,001 – AU$87,000: AU$3,572 plus 32.5c for each AU$1 over AU$37,000;
- AU$87,001-AU$180,000: AU$19,822 plus 37c for each AU$1 over AU$87,000;
- AU$180,001 and over: AU$54,232 plus 45c for each AU$1 over AU$180,000;
- With effect from 1st July 2018 until 30th June 2022, a new tax offset has been added called LAMITO (Low and Middle Income Offset). This incentive will be available to those who earn an income of up to AU$125,333.
Miscellaneous tax information
- In order to increase corporate tax transparency, the Australian Government releases an annual report containing i) company name ii) business number, iii) total income, iv) taxable income, and v) tax payable for i) Australian public and foreign owned corporate tax entities with total income of AU$100 million or more and ii) Australian-owned resident private companies with total income of AU$200 million or more. The reports are available at the Australian Government’s website;
- Australian companies may carry forward their business losses indefinitely. However, carry forward of capital losses are only allowed to be offset against capital gains. Carry back of losses is also partially allowed;
- Australia has signed double taxation treaties with 50 countries including Canada, China, France, Malaysia, Singapore, the United Kingdom and the United States to reduce withholding tax on payments abroad;
- Healy Consultants Compliance Department will assist our Clients with i) documenting and implementing accounting procedures ii) implementing financial accounting software iii) preparation of financial accounting records and iv) preparing forecasts, budget and sensitivity analysis.
Legal and compliance
Healy Consultants Compliance Department guides our Client through legal and tax obligations for both company setup and maintenance.
- In accordance with Section 201A of the Australia Corporations Act 2001, every Australian registered company shall have at least one director who is ordinarily resident in Australian. Most of our Clients request Healy Consultants to be the resident director. If required, Healy Consultants Australia resident director service fee amounts to AU$5,910 per annum;
- An Australian company secretary is not required, however, we recommend one be appointed to ensure compliance with Australia Corporations Act;
- When pursuing business registration, it’s important to find out what registrations and licences apply to your firm. This can be complex area; as local, state, territory and federal governments handle registration and licensing for various aspects of Australian company;
- Foreign investors in Australia are required to adhere to the Foreign Investment Policy and FATA. The FI Policy is liberalised for businesses investing in agriculture, such as agribusiness, and mining;
- Every Australian Business entity is required to report annually to the authorities the information about its shareholders, directors, executives and general financial position in its Annual Return in a prescribed format;
- The identities of shareholders and directors are on the Australian Business Register (ABR), which enhances commercial transparency. A search of the Australian business register is available on the Australian Business Register (ABR) website;
- For an Australian registered company to be listed on the national stock exchange, the ASX must be satisfied with i) the profit/asset test ii) the shareholders spread and iii) the prospectus memorandum.