Taxation System
If you are thinking about opening a business or working in Australia you will need to pay tax. Here is some important information abotut taxation in Australia and how it may affect you.
The Australian Taxation Office (Tax Office) collects money - taxes - from business and individuals which funds important community services like schools, hospitals, education infrastructure like roads and railways.
If you earn money in Australia, you will need to pay tax. The money you earn - or income - may be from a job, a business or investments in rental property or shares you may have in Australia or overseas.
The Australia taxation system requires you to inform the Tax Office of your income for you to pay the correct amount of tax.
I helping you to fulful this important community responsibility, the Tax Office requires you to be honest in the information you provide and endeavours to treat you fairly with respect.
If you are thinking of running a buiness in Australia
Who pays tax?
In general, if you are are an Australian resident and/or you get income from a business activity conducted within Australia, you will need to pay income tax. A company is a resident of Australia if it is incorporated in Australia, or carries on a business in Australia and has its central management and control in Australia.
I want to start a business in Australia - what is my first step?
You can contact the Tax Office to find out how to get an SAustralian business number (ABN) and a tax file number (TFN). All businesses need an ABN to use in dealings with the Tax Office and other areas of government. You will also need a TFN to complete your business tax return.
What taxes do I need to consider?
Goods and Services Tax (GST)
If you sell goods or provide a service, you may need to charge a GST of 10%. Any business with an annual turnover of more than $75,000 per annum must register with the Tax Office for GST. Some basic food products such as fruit, vegetables, meat and bread do not attract the GST.
Income Tax
You will need to pay tax on your business' net income. Net wincome is the money you have eft over after you deduct your business expenses from the money your business has made.
To avoid having a tax bill at the end of the year, provision for income tax is made through the Pay As You Go (PAYG) system. If you pay salary or wages to an employee you will need to withhold amounts from the payment and send it to the Tax Office. If you recieve business or investment income you make provision for your own tax liability through the PAYG.
You may also need to pay tax on all or part of any capital gain that you make if you sell your business or an asset from your business.