Federal and State Taxes

Taxation • Taxation is the compulsory payment of a proportion of

earnings to the government. • Taxation is a key issue when starting a new business.

Federal and State Taxes• A person who is starting a new Biz should be familiar with the

different federal and state taxes that apply to companies.

GROUP TAX• Group tax levied by: Federal Government • Group tax is imposed on the employee • It is taken from the employee’s salary or wage directly.

Fringe Benefits Tax• Fringe benefits tax levied by: Federal Government • Tax on the prevision of a benefit on an employee. E.g. cars for

private use, low-interest loans, housing and accommodation. –in place of salary or wage

• Paid by the employer at a rate of 48.5%

Good and services Tax • Good and services tax (GST) levied by: Federal Government • broad based tax of 10% on the supply of most goods and

services consumed in Australia.

Company tax

• Company tax levied by: Federal Government • Paid on the earnings of a company and calculated on the company’s

taxable income (income that is left after allowable deductions are calculated)

• Currently calculated at 30% of taxable income.

Capital Gains Tax • Capital gains tax levied by: Federal Government • Calculated on the profit made on the sales of assets acquired

after 19th September 1985. • Including the sale of a business or propeties bought and

resoled within 12 months

Stamp duty • Stamp duty levied by: State government • Imposed on documents that give evidence to transactions,

such as leases and mortgages and motor vehicles

Land Tax • Land tax levied by: State government • A tax on land owned by individuals or businesses over a

certain value. ( in 2010 it was land valued over $376 000) • Land zoned as rural and used mainly for primary production or

an individual’s are exempt from land tax .

Payroll Tax • Payroll Tax levied by: State government • Payable on wages paid by an employer to their employees on

payrolls that exceed $638000 at a rate of 5.5% (2010)

Glossary words • Taxation • Taxation is the compulsory payment of a proportion of

earnings to the government.• ATO Australian taxation office • The Australian Taxation Office (ATO) is an Australian

Government statutory agency and the principal revenue collection body for the Australian Government. The ATO has responsibility for administering the Australian federal taxation system and superannuation legislation. Responsibilities for the operations of the ATO are within the portfolio of the Treasurer of the Commonwealth of Australia.

Glossary • GST goods and service tax • Is a broad based tax of 10 per cent tax on supply of most

goods and services consumed in Australia’s whole sale tax system.

• Levy • Levy is the charge that government imposes in case of

defaulting tax.

Questions • Enjoy: • Classify which taxes were levied by the federal government

and the NSW government (4 marks)• Analyze two taxes and why they are important (6 marks)

• Taxes levied by the federal government include group tax, fringe benefits tax, goods and services tax (GST), company tax and capital gains tax. The NSW government levied the stamp duty, land tax and payroll tax.

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