Australian Tax Laws
Australia is a popular drawcard for investors as it is the sixth lowest taxing country in the 31-member Organisation for Economic Co-operation and Development (OECD) according to IMD 2010 World Competitiveness Yearbook.
Businesses in Australia are subject to tax laws imposed by local, state and federal governments. Income tax is the most important tax imposed by the Australian Government on individuals and corporations. There is no state or local government tax on profits.
Taxation Comparison
The table below provides a global comparison of taxation rates, highlighting Australia. While Australia's base corporate tax rate may appear high, there is considerable evidence to indicate few international firms pay as much as 30%.
To encourage investment, the Australian Government is committed to ongoing reform to ensure Australia’s tax system remains internationally competitive.
Global Comparison of Taxation Rates
| Country | Maximum Tax Rate Calculated on Profits |
|---|---|
| USA | 35% |
| Germany | 31% |
| Canada | 31% |
| New Zealand | 30% |
| Spain | 30% |
| Australia | 30% |
Source: IMD 2010 World Competitiveness Yearbook.
Northern Territory Advantage
The Northern Territory is the lowest taxing jurisdiction for small business in Australia.
No Land Tax - The Northern Territory is the only Australian state or territory that does not have a land tax levy imposed on land owners. Principal places of residence are usually exempt from land tax, although this is subject to certain qualifying criteria which vary between jurisdictions.
Payroll Tax - The Northern Territory has the second highest payroll tax thresholds with a taxable wage of $1 250 000 required before incurring payroll tax.
Payroll tax is a general purpose tax assessed at a rate of 5.9% on taxable wages paid by an employer for services rendered by employees in the Northern Territory. Employers are required to self-assess the tax and remit the appropriate amount to the territory revenue office, usually by way of a monthly return.
An employer who is not a member of a group of businesses, will not be liable for payroll tax if their total Australian taxable wages are less than $1 250 000. If an employer is a member of a group, the total taxable wages paid by all members of the group determines whether the employer has a payroll tax liability.
Businesses operating in the Northern Territory are subject to Australian taxation law and Australian corporate law.
Australian Corporate Regulator
Content current at 14 January 2011.
