Understanding essentialities of the Australian tax system


For our UK readers

The tax system of Australia is extremely vast to say the least. The citizens therein are liable for the payment of 125 different forms of taxes every financial year. Like every other country, the Australian government levies leveled taxes on its citizens on the basis of:

  • Taxes to be paid to the Australian government
  • Taxes to be paid to State government
  • Taxes to be paid to local government.

The tax count varies invariably and distinguishing the payments is getting complex day by day. Agriculture sector only levies 67 taxes on the Australian citizens. States treat business working across multiple jurisdictions at individual rates, making it difficult for enterprises to make clear estimates on the taxes to be paid. This amounts to increase in the count of taxes to be paid every year.

No clear classification of taxes is available as per ABS for Australian citizens. The current bifurcation of Australian taxes can be understood as:

1)    Income Taxes:

Individuals are liable for paying taxes on their income that include daily wages, monthly salaries, any special allowances, interest earned, dividends earned and rents received on owned properties. Australian Tax organization handles all kinds of different taxes that fall under this category on an annual assessment basis.

2)    Corporate Taxes:

It is a segment of Australian taxes that startups, budding enterprises, and existing corporates are liable for paying to the ATO. The corporate tax is to be paid in a quarterly basis.

3)    Goods Taxes:

The regular goods supplies and services are taxable under ATO. The service providers pay taxes across border transportation and collect taxes for imported goods.

4)    Road Taxes:

Road taxes are paid to the state government by vehicle owners and registered drivers. At the time of new vehicle purchase, the registration taxes also need to be paid.

5)    Agricultural Tax:

Almost 67 types of agricultural taxes are levied upon Australian citizens on various agricultural products. The tax is paid by the entire channel of wholesalers, brokers, and exporters too. Levies Revenue Services are liable for the tax collection for the Agriculture segment

6)    Insurance Tax:

Insurers need to pay tax to State Revenue Offices on the principal amount of insurance. The taxes are levied on premiums of the policy too and are paid to the state agency.

7)    Municipal Taxes:

This is part of the local government taxes and spans across the value of properties owned by individuals, the type of land they own, taxes on immovable properties and it is all managed by the local government authorities.

Thus in conclusion, as per the various studies and statistics attained from the same, 95% of the Australian tax is collected from 10 sources. These include Personal and company tax, Land tax, tobacco excise duty, Payroll taxes, Fuel excise and others. But the smaller taxes are so invariable in count that it has become a tedious process of collecting and counting the taxes.