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If you open a business or work in Australia you will need to pay tax.
Tax is paid out of money you earn from a job, a business or investments.
The Australian Taxation Office (Tax Office) collects the money – or taxes – from businesses and individuals. The money is used to pay for important community services like schools, hospitals, education, roads and railways.
The Australian taxation system requires you to inform the Tax Office of your income so you pay the correct amount of tax.
If you are thinking of running a business in Australia…
You need to contact the Tax Office to find out how to get an Australian business number (ABN) and a tax file number (TFN).
Taxes you will 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.
- Income Tax
You will need to pay tax on your business’ net income. 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. Australian law also requires you to pay amounts, called contributions, into a superannuation account for each person you employ. These superannuation contributions are in addition to the salary and wages you pay. You may also need to pay tax on any capital gain that you make if you sell your business or a business asset.
Where to get more information about taxes and my business
The Tax Office can help you get started with a range of assistance including business start-up seminars as well as face-to-face visits with a tax officer, electronic record keeping tools, and free advice.
More information on business and taxes, including information in languages other than English can be accessed through the Tax Office website at www.ato.gov.au
If you are thinking about working in Australia…
You will have to pay tax if you earn an income in Australia. The tax rates depend on whether or not you are an Australian resident. A higher rate of tax is applied to your taxable income if you are a non-resident.
Before you start working in Australia, you will need a tax file number (TFN). A TFN can be obtained online at the Tax Office website www.ato.gov.au
Your TFN is yours for life so keep it secure. Allowing someone else to use your TFN, selling it or giving it away is a crime that can result in heavy fines or jail.
How do I pay tax?
When you work for someone, your employer automatically takes tax out of your salary or wages every pay period. At the end of the financial year (every 30 June), your employer will issue you with a document called a ‘payment summary’ which shows how much you earned, how much tax was deducted from your pay and the period of your employment.
You use your payment summary to lodge a tax return with the Tax Office by 31 October every year. If you are considered a resident of Australia for income tax purposes then your tax return must show all sources of income, including any overseas or investment income. You may be able to reduce the amount of tax you pay through claiming some deductions and tax offsets.
Medicare Levy
Medicare is the scheme which gives Australian residents access to health care. To help fund the scheme, resident taxpayers are subject to a Medicare levy. Normally the levy is calculated at 1.5% of your taxable income
Planning for retirement
Superannuation is Australia’s name for pension or retirement savings. If you are an employee, your employer is generally required to pay amounts, called contributions, into a superannuation account for you. These contributions are in addition to the payment of your salary and wages.
Your superannuation money cannot be cashed before you retire.
Getting more information
There is free information and publications on the Tax Office’s web site – ato.gov.au Help is also available from independent tax accountants and advisers in the community.
When you arrive in Australia, you can call the Tax Office on 13 28 61 for any enquiries you have about personal tax. If you don’t speak English well and want to talk to a tax officer, call the Translating and Interpreting Service on 13 14 50 for help with your call. To request further assistance or information in languages other than English please email communityadvisorygroups@ato.gov.au
Information supplied by:
The Australian Taxation Office
Website: www.ato.gov.au
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