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 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 $ ) 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 $ 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.