INDIVIDUAL TAX RATES 2007-2008 Tax on this income $1 - $6,000 Nil $6,001- $30,000 15c for each $1 over $6,000 $30,001 -$75,000 $3,600 plus 30c for each $1 over $30,000 $75,001 -$150,000 $17,100 plus 40c for each $1 over $75,000 $150,001 and over $47,100 plus 45c for each $1 over $150,000 Taxable income Tax on this income $0 - $6,000 Nil $6,001 - $34,000 15c for each $1 over $6,000 $34,001 - $80,000 $4,200 plus 30c for each $1 over $34,000 $80,001 - $180,000 $18,000 plus 40c for each $1 over $80,000 $180,001 and over $58,000 plus 45c for each $1 over $180,000 The above rates do not include the Medicare levy of 1.5% (read What is the Medicare levy? for more information). Tax offsets reduce the tax payable. Tax offsets based on taxable
income levels apply to a range of circumstances. For more information
read About tax offsets. If you are a non-resident for the full year, the following rates apply: Taxable income Tax on this income $0 – $30,000 29c for each $1 $30,001 – $75,000 $8,700 plus 30c for each $1 over $30,000 $75,001 – $150,000 $22,200 plus 40c for each $1 over $75,000 $150,001 and over $52,200 plus 45c for each $1 over $150,000 Taxable income Tax on this income $0 – $34,000 29c for each $1 $34,001 – $80,000 $9,860 plus 30c for each $1 over $34,000 $80,001 – $180,000 $23,660 plus 40c for each $1 over $80,000 $180,001 and over $63,660 plus 45c for each $1 over $180,000 Non-residents are not required to pay the Medicare levy. If you are under the age of 18, and receive ‘unearned’ income (for example, investment income), special rates apply. Read Income of individuals under the age of 18. A simple tax calculator is available to help you calculate the tax on your taxable income. The comprehensive tax calculator
also takes into account Medicare levy, HECS/ SFSS repayments, tax
offsets and tax credits to give you an estimate of the amount of your
tax refund or debt. If you want to know how much your employer (or other payer) is required to withhold from payments to you, use the Tax withheld calculator. The following rates of tax apply to companies for the 2006–07 income year. Rate Companies generally 30 Private companies generally 30 Registered organisations (including friendly societies) 30 15 Life insurance companies 30 15 Retirement savings accounts providers 15 Rate applicable to institution Pooled development funds 15 25 30 Credit unions 30 45 30 Small credit unions are taxed on all their taxable income, but there is special treatment of mutual interest. Interest derived by small credit unions that are also approved
credit unions, being interest paid to the credit union by its members
not being companies in respect of loans made to those members, is
exempt from tax. Credit unions with a notional taxable income of at least $50,000 but
less than $150,000 are taxed on their taxable income in excess of
$49,999. Credit unions with a notional taxable income of $150,000 or more are taxed on all of their taxable income. Notional taxable income of a credit union is its taxable income if
section 23G of ITAA 1936 did not apply and Division 9 of Part III of
ITAA 1936 had not been enacted. Non-profit companies Non-profit companies with a taxable income of between $417 and $915 are taxed on their taxable income in excess of $416. Non-profit companies with a taxable income of $915 and above are taxed on all their taxable income. Taxable income $0–$416 Nil Substituted accounting period Rates % for early balancing friendly societies in the 2006–07 income year: Class of taxable income Period from start of 2006–07 until 30 June 2006 income year Period from 1 July 2006 until end of 2006–07 income year Complying superannuation 15 15 Ordinary 30 30 Rates for early balancing life insurance companies in the 2006–07 income year: Class of taxable income Period from start of 2006–07 until 30 June 2006 income year Period from 1 July 2006 until end of 2006–07 income year Complying superannuation 15 15 Ordinary 30 30
Tax rate -AUSTRALIA
INDIVIDUAL Tax rates 2008-09
Non-residents
Tax rates 2007-08
Tax rates 2008-09
Children
Calculators
Tax deducted from my pay
What to read/do next
Company Tax rates 2006-07
%
(Note that special tax rates apply where a company commences to be, or ceases to be, a PDF during the income year.)
$417–$915
$915 and above
55
30
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Useful Australia tax tips from expertsIn 2008-09 entrepreneurs can expect to get someextra scrutiny Tax experts gave some tips to save tax and sometimes your face Why there is road side alert now? BecauseThe Federal Government is seriousabout taxes. It has given the taxman an extra $257 million over the next fouryears to increase its scrutiny of businesses – it expects to collect an extra$1.98 billion for its efforts. All this means you need to have your tax affairs in good order to claim asmany deductions as possible. To help you, we dug the web and the following advice was available from experts.. Tax planning is like getting another income stream if you do it properlyunder the rules. Because, the Governmentgives incentives to one area and takes away from the other. PricewaterhouseCoopers partner Paul Brassil says his best tip forentrepreneurs is to spend more time finding the right tax adviser. “Findsomeone you really like working with, and who has strong technical backup inpeople and resources. Too often people muddle along with an adviser from thedistant past, without recognising that the needs of a growing business includeupgrading the level of advice they receive.” And fellow PwC partner Gregory Will says it is never a good idea to changeyour business strategy just because you stand to get a tax benefit. “Run yourbusiness to maximise the profit you can make, and let the tax experts plan andmanage your tax. Not vice-versa." 01. Self employed? What about Supercharge yourself ?Superannuation contributions made by the self-employed to themselves frompre-tax income are fully tax deductible, so if you’ve got a big tax bill comingup it could be a good time to set some money aside for a rainy day. There are some limitations on the contributions that can be made, accordingto CPA Australia: You have to be under the age of 75; you cannot earn more than10% of your income from other employment; except in certain limitedcircumstances, there is a cap on contributions of $50,000 a year for peopleunder 50 and $100,000 for those over 50. 2. Are u entrepreneur? What abouta tax offset for a start!If you’re an entrepreneur and you’re likely to have turnover this year ofless than $75,000, make sure you claim the 25% available under the entrepreneurs’ tax offset(ETO) on the tax payable on your business income. “This can be a real perk for micro businesses, who will be cash strapped intheir initial years as they build a business,” CPA Australia Ssenior taxcounsel Mark Morris says. “Moreover, this will not be means tested for the 2008financial year.” From 2009 the ETO will be means tested – available only to singles withpersonal income below $75,000 or household income below $120,000 – so if you’reeligible, don’t delay. 3. Is company still needed?Scott McGill, a partner at accounting firm Pitcher Partners, says tax timeis a good time to consider your business structure and ask yourself whetherusing a company to operate your business is still effective. While operating asa company has commercial benefits – many organisations prefer dealing withcompanies rather than individuals or trusts – it could be cheaper to operate asan individual. As the 30% individual marginal tax rate (31.5% including Medicare) nowapplies to income up to $80,000 and the top marginal tax rate of 46.5% does notcut in to above $180,000, the company tax rate of 30% is becoming less attractive. He gives the example of a mum and dad company that can have an annual netincome of less than $160,000 before their salaries will be worse off from ataxation perspective if they retain profits in the company. It is also amarginal benefit for net income up to $360,000, as the average tax rate back tomum and dad on that profit amount in their own names is close to the 30%company tax rate that they are chasing. 4. Get those inter-companyagreements ship-shapePeter de Cure, a partner in KPMG’s middle market advisory practice, says itis also time to get your intercompany agreements sorted out before the tax mancracks down. One of the most common forms of intercompany agreements is whereback office or administrative functions are shared across a group of relatedcompanies, with the expenses for these functions also shared. Some companies have used these shared functions to effectively shift taxprofits and losses around, but now the taxman wants proof that these agreementsare legitimate. “The ATO is more and more focused on businesses having theirhouse in order in terms of having the right documentation for agreements,” deCure says. 5. Thatthing.... the Trust deeds , review itMcGill at Pitcher Partners also warns that the tax office is ramping up itsfocus on discretionary trusts, which means you need to check that you’ve gotthings in order. There are three big things to check. First, make sure you comply with therequirements of your deed in declaring distributions to ensure it is not invalid.Second, ensure your trust is still working as you expect it to – if it haspassed its vesting date, it will not work at all. Finally make sure that theperson or entity that has the power to replace the trustee (known as the“appointer”) is still the right person. 6. Small business CGT concessions are more generous nowCapital gains tax (CGT) has been made significantly more small-businessfriendly in recent years, both in terms of the available concessions and whocan access them. Business owners should start thinking now about how to position for theirbusiness to take greatest advantage of new CGT rules, according to McGill. “You may not be currently considering the sale of your business, but itnever hurts to look into methods to allow you to access the small business CGTconcessions,” he says. There are a range of CGT concessions available, from which small business iseligible to claim up to 13 separate concessions each year. Possibly the most important concession deems business assets CGT free wherethey are sold after being held for 15 years and the business owner is eitherover 55 and retiring or permanently incapacitated. Alternatively, according to CPA Australia, where a business asset has beenheld for less than 15 years, there will be an automatic 50% reduction of anygain if all the relevant conditions are met. Business owners may also qualifyfor other concessions to reduce the balance of their CGT liability such as the$500,000 retirement exemption. Previously, most CGT concessions were only available to businesses with netCGT assets that did not exceed $6 million in value or with turnover that wasbelow $2 million. But now, satisfaction of one threshold will make businesseligible for the concessions even if they breach the other – so a business withassets worth more than $6 million for example, but with a turnover that is lessthan $2 million, will qualify. 7. Review bad debts – do it before closingaccounts!If you are carrying bad debts, Malacco at Hall Chadwick says it’s a good ideato review them. If you decide they are not going to pay, write off any baddebts before 30 June or you will have to wait until next year for thededuction. 8. Cars are there to reduce your taxburdenThere are three different methods of claiming tax deductions forwork-related motor vehicle travel – CPA Australia says tax savings can be hadby choosing the method that works best for you: If you are planning to claim a deduction for less than 5000 kilometres ofwork-related travel, you can claim a deduction for your car expenses on acents-per-kilometre basis (check the work related car expenses calculator). If you have kept a log book, odometer readings and receipts, you can claim adeduction for total running expenses. If you plan to claim for business travel in excess of 5000 kilometres, itmay be possible to claim one-third of actual car expenses or 12% of theoriginal value of the vehicle without a logbook. 9. Clear the decks of businesscosts before 30 JuneWherever possible, business owners should bring forward up-coming expensesso they can be claimed as deductions in this financial year, Grant Thornton taxservices director John Ross says. Ross advises business owners to have a think about the costs that may be onthe horizon. Possible costs that could be brought forward include:
10. Depreciate, accelerate, reviewscheduleThe CPA’s Mark Morris says small businesses can obtain significant taxbenefits by keeping their depreciation schedules up to date. “Small businesses can obtain significant benefits by being able to write offany depreciating assets costing less than $1000, and by pooling assets over$1000 and depreciating them at accelerated rates. Businesses can also claimimmediate deductions for certain pre-paid expenses,” Morris says. 11. Packagethat salaryMcGill from Pitcher Partners says it’s a good idea to review any salarypackaging arrangements and check whether they are still effective. With theincrease in the tax brackets, employees who earn more than $180,000 are now theonly ones that really fully benefit from packaging items (such as cars andexpense payments) subject to fringe benefits tax. Following the federal budget in May, employees will no longer be able toobtain laptops, briefcases, mobile phones, personal digital assistants andsimilar items as exempt FBT items each year,unless they are acquired primarily for work-related purposes. It’s a bigchange, and you might need to seek advice about how to most effectivelystructure salary packages in the future. 12. Pay your super contributionsbefore 30 JuneHere’s a quick one, and one that Peter de Cure from KPMG says manybusinesses have forgotten: If you don’t physically pay employee superannuationcontributions before 30 June, you can’t claim them as deductions. So what areyou waiting for? 13. Defertha’ income for a change!Gino Malacco, partner in Hall Chadwick’s tax division, says that given thechanges to tax rates that kick in on 1 July, business clients should try anddefer income to next financial year where possible and bring forwarddeductions. It is easier for some businesses than others to defer income until the endof the financial year. For example, if you’re a normal trading business thatbrings to account income on sales, your ability to defer income is limited. But if you’ve got a small business where tax on income is not assessableuntil an invoice is raised on a job, you can delay raising the invoice and sodelay income to the following year. 14. Check the company “loans” that are actually dividends,the new regime is onIf you’ve been doing something slightly naughty and taking money out of yourcompany and describing it as a “loan” when it is actually a dividend, then thetaxman is going to be on your tail after 1 July. But until then, Malacco saysyou’ve got a chance to get these “loans” cleaned up. If you can properly document a cash advance paid out of the company as beinga proper loan, and sign off on that with minimum repayment and interest ratesas required by tax legislation, then the tax office won’t call it a dividend.But you can only do that up until 30 June, after which the tax office will callthese “loans” dividends, upon which the shareholder will pay maximum tax withno imputation benefits. 15. Crystallisesome tax losesGiven the poor performance of the sharemarket in the last year, plenty ofpeople will have incurred a loss on their shares. If you’ve got a capital gainstax bill, Jon Dobell, the managing partner, strategic growth markets, at Ernst& Young, says it makes sense to crystallise those losses and offset againstcapital gains for tax purposes. But if you are thinking of selling an asset at a nominal loss and thenbuying it back – purely with the intention of minimising capital gains tax – beaware that the taxman is focusing heavily on these transactions, known as wash sales. 16. If it’s work-related, deduct itMost people know that you can claim deductions for up to $300 inwork-related expenses without having the receipts to prove it, but there are manyother juicy deductions available. CPA Australia suggests looking at the following possible deductions:
17. Non-work related expenses canbe deductible, tooA partial or full deduction can be claimed for a wide variety of non-workrelated expenses, including:
18. Depreciateyour toolsIf an item or piece of equipment helped you earn assessable income otherthan business income over the past year, chances are you can claim some form ofdeduction for it. Eligible items include tools, calculators, briefcases, computer equipmentand technical books – the amount that different items can be depreciated forvaries, so check CPA Australia or the tax office website for the details. 19. Get your rental deductions rightThe explosion in property investment in recent years – there are now 1.5million Australian taxpayers who own a property – means the taxman is intent onensuring all rental deductions are above board. “It is critical that rental property owners have their books in order whenthey consult their tax agent at the end of the financial year and haveup-to-date records and copies of all relevant receipts for the year,” CPA Australia’sMorris says. Morris advises taxpayers to ensure they only claim deductions for expensesincurred for the period when the property is rented or available for rent andin the year of the tax return. 20. Minimise the CGT you pay oninvestmentsWhen calculating the value of assets for capital gains tax purposes, makesure all relevant costs of acquiring the asset – purchase price, capitalimprovements, stamp duty, legal costs, advertising expenses and commission fees– are taken into account to ensure the assessment is as low as possible. There is also a general 50% discount where the asset sold has been owned formore than 12 months. But, CPA Australia warns, don’t try and push envelope by under-reporting CGTon your tax return – the tax office has recently beefed up its data matchingprogram to include data from all state land title and revenue offices, theAustralian Stock Exchange, share registries and managed funds in attempt tocatch CGT cheats. |
HEADLINE TAX RATE MAYA - fun The LowIncome Tax Offset (LITO). LITO is a rather simple overlay calculation which canactually be expressed by simply modifying the tax table. However instead ofmodifying the tax table they retain the overlay calculation called LITOfor their own reasons. Over thefold this is a table showing the tax scales before and after applying the LITO.This table is created just for fun. Working out how tax rules effect taxoutcomes is fun. Of course overlaying Family Tax Benefits Part A and Family TaxBenefits Part B depends on multiple variables besides personal income so we can’tshow that in such a simple table.. And once we start to include theeffects caused by the other “benefits” of the tax/welfare system thesimplicity tends to dissipate somewhat (even as the level of fun continues toincrease). Amusinglythose that earn between $34000 and $48750 per annum pay a higher marginal rateof income tax once the effects of LITO are included than those earning $75000per annum. However it is fun. We attempted to show the effect of the low income tax offset (LITO) bycreating an amended income tax table. Taxable Income Tax on this Income Tax on this income after LITO included $ 0 - $6,000 Nil Nil $6,001 - $11,000 15cfor each $1 over $6,000 Nil $11,001 - $30,000 15c for each dollar over $11,000 $30,001 - $34,000 $2,400 plus 19 cents for each $1 over$30,000 $34,001 - $60,000 $4,200 plus 30c for each $1 over $34,000 $3,160 plus 34c for each $1 over $34,000 $60,001 - $80,000 $12,000 plus 30 c for each $1 over $60,000 $80,001 - $180,000 $18,000 plus 40c for each $1 over $80,000 $18,000 plus 40 c for each $1 over $80,000 Over $180,000 $58,000 plus 45c for each $1 over $180,000 $58,000 plus 45c for each $1 over $180,000 As indicated last week this only incorporates the effects of LITO and notthe various other rebate schemes such as the Senior Australians Tax Offset(SATO) or Family Tax Benefits (FTB-A and FTB-B). For PAYG tax payers only half of the LITO rebate flows directly into theirpaypacket. The rest comes by the way of a refund after submitting a tax returnat the end of the year. This would seem to be a mechanism for making peoplefeel somewhat optimistic in relation to submitting a tax return. Perhaps a wayto train young taxpayers to play the game. I can’t help feeling that the point of all these rebate schemes is to makethe tax system more obscure and to help people feel like they are specialbecause there is a rebate scheme for their particular circumstances. If you’reold they give you a rebate (SATO), if you’re young they give you a rebate(LITO) and if you’re in between young and old and raising afamily they give you a rebate (FTB). Please see the proper tax table asgiven in Wikipedia (without Low Income tax offset) to understand what headlinetax rate MAYA is all about Income Tax Rates 2008-09 - excluding Family Tax Benefit see wikipedia[3] Taxable income Tax on thisincome Effective TaxRate $0 – $6,000 Nil 0% $6,001 – $34,000 15c for each $1 over$6,000 0% – 12.3% $34,001 – $80,000 $4,200 plus 30c for each$1 over $34,000 12.3% – 22.5% $80,001 – $180,000 $18,000 plus 40c foreach $1 over $80,000 22.5% – 32% Over $180,000 $58,000 plus 45c foreach $1 over $180,000 32% – 45% |