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Income Tax

Income tax is calculated based on tax payer’s assessable income, allowable deductions and tax offsets.

Income tax for Individuals

The Australian Taxation Office (ATO) publishes lists of assessable income, allowable deductions and tax offsets for individuals. Sole-traders declare business income in their individual income tax return, they are not required to complete a separate return for their business. Tax on individuals is charged at marginal rates. You can use the tax tables to determine how much you are taxed.

General individual income tax rates for residents 2015-16

  • $0 to $18,200
  • Nil tax payable
  • $18,201 to $37,000
  • 19c for each $1 over $18,200
  • $37,001 to $80,000
  • $3,572 + 32.5c for each $1 over $37,000
  • $80,001 to $180,000
  • $17,547 + 37c for each $1 over $80,000
  • $180,001 and over
  • $54,547 + 47c for each $1 over $180,000

 

General individual income tax rates for non-residents 2015-16

  • Up to $80,000
  • 32.5c for each dollar
  • $80,001 to $180,000
  • $26,000 + 37c of the part over $80,000
  • $180,001 and over
  • $63,000 + 47c of the part over $180,000

*Note: Non-residents are not required to pay the Medicare levy

Note: The temporary budget repair levy adds an additional 2% tax on that part of an individual's income above $180,000, for the 2014-15, 2015-16 and 2016-17 income years.

Income tax for Partnerships

The partnership itself is not a taxable entity. However, each partner is liable for their share of the net income and/or loss generated from the business carried on by the partnership. A Partnership tax return is required by ATO to present all business activities including income earned and deductions claimed for the financial year, and how the net income or loss was shared among the partners. For partnerships generating income from joint investments (e.g. investment in shares or rental properties) only, a Partnership income tax return is not required. The income is declared in each partners’ individual tax return.

Income tax for Trusts

Where a beneficiary (not under a legal disability) is presently entitled to a share of net income of a trust, the trustee is not taxable. Rather, each such beneficiary includes a share of the trust's net income in the beneficiary's taxable income. A trust cannot distribute a net loss to the beneficiaries, the loss is carried forward to offset against net income in later years.

Where a presently entitled beneficiary is under a legal disability (for example, under 18 years of age, a non-resident, or incapable of managing his/her own affairs), the trustee is taxable on the beneficiary's share of the trust's net income. The tax rates correspond to the tax rates that would otherwise be payable by the beneficiary.

Where no beneficiary is presently entitled to part of the trust's net income, the trustee is taxable. The tax rates depend on the trust's particular circumstances, for example income of deceased estates attracts a different tax rate depending on the stage of administration of the estate.

Income tax for Companies

A company is a distinct legal entity with its own income tax liability, and is required to lodge a Company income tax return. The company tax rate is generally 30%. Special rates apply to certain types of companies, or companies in certain industries.

Income tax for Superannuation funds

A superannuation fund is a distinct legal entity with its own income tax liability and is required to lodge an income tax return. Different income tax return forms are used by self-managed superannuation funds and other superannuation funds. The superannuation fund tax rate is generally 15%. Higher rates apply to net non-arm's length income and contributions by or on behalf of a member who has not quoted his/her tax file number to the trustee.

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