Welcome to BuyAssociation.co.uk

Australia: Taxes

Overview

An important consideration when you’re buying a home in Australia, even if you don’t plan to live there permanently, is taxation, which includes property tax, wealth tax, capital gains tax (CGT) and inheritance tax. You will also have to pay income tax if you live permanently Down Under or earn an income from a property there.

INCOME TAX

As in many countries, there’s a two-tier tax system in Australia: first class for the self-employed and companies and a second class system, called pay-as-you-go (PAYG), for employees. The self-employed pay their tax in arrears, whereas an employee’s income tax is deducted at source from his salary by his employer. There’s no state income tax in Australia, although it may be introduced under wide-ranging tax reforms currently under consideration. The income tax year in Australia runs from 1st July to 30th June of the following year (for reasons known only to the tax office). Tax is calculated on taxable income derived during the income tax year, although in certain circumstances a substitute accounting year beginning on a different date may be used. Changes in federal taxation are usually announced in the annual budget in May. Australian income tax law recognises the following general types of taxpayer: companies, individuals, partnerships and trusts. Specific provisions apply to insurance companies, mining operations, minors, primary producers, superannuation funds and certain other businesses.

Domicile

Residents of Australia are taxed on their worldwide income and non-residents only on Australian income. An individual is resident in Australia for tax purposes if he:

• normally resides in Australia or

• is domiciled in Australia and doesn’t have a permanent place of abode outside the country or

• spends at least 183 days per financial year in Australia (unless he doesn’t intend to take up Australian residence and has a usual place of abode outside Australia).

Double-taxation Agreements

Australia has double-taxation agreements with many countries, including Argentina, Austria, Belgium, Canada, China, the Czech Republic, Denmark, Fiji, Finland, France, Germany, Hungary, India, Indonesia, Ireland, Italy, Japan, Kiribati, the Republic of Korea, Malaysia, Malta, the Netherlands, New Zealand, Norway, Papua New Guinea, the Philippines, Poland, Romania, Singapore, the Slovak Republic, South Africa, Spain, Sri Lanka, Sweden, Switzerland, Thailand, the UK, the USA and Vietnam. Despite their name, double-taxation agreements are designed to prevent you paying double taxes and not to ensure that you pay twice! Under double-taxation agreements, certain categories of people are exempt from paying Australian tax. If part of your income is taxed overseas in a country with a double-taxation treaty with Australia, you won’t be required to pay Australian tax on that income.

Foreign employees working in Australia for Australian companies or organisations are subject to Australian tax on their earnings. However, if your stay is less than six months, you aren’t considered an Australian resident and are subject to Australian tax at the rates applicable to non-residents. However, double-taxation agreements contain particular articles dealing with directors, entertainers, government services, professors and teachers, which may alter this position. If you stay in Australia for longer than six months, you may be considered an Australian resident and therefore pay tax at the same rates as residents. Salary and wage income earned by residents from services performed overseas is exempt if the taxpayer has been employed outside Australia for a continuous period of at least 91 days, provided the income has been taxed overseas.

In addition to Australian taxes, you may also be liable for taxes in your home country. Citizens of most countries are exempt from paying taxes in their home country when they spend a minimum period overseas, e.g. one year. One exception is citizens of the USA. It’s usually your responsibility to familiarise yourself with the tax procedures in your home country or country of domicile. If you’re in doubt about your tax liability in your home country, contact your embassy or consulate. American citizens can obtain a copy of a brochure entitled Tax Guide for US Citizens and Resident Aliens Abroad from American embassies.

More pages

Page 1: Overview
Page 2: Tax Evasion & Avoidance
Page 3: OTHER TAXES
Page 4: Capital Gains Tax

Holiday home insurance with Staysure - the over 50's experts

The best villa holidays from James Villas with our hand-picked villas and all the support you need in resort, we're the number one choice

Book now, pay when you stay - 100's of hotel rooms worldwide with laterooms.com

Holiday home insurance from intasure - Click Here UK insurance for your property overseas