Part 1 There are many forms of taxation in Australia. Individual and companies may be required to pay taxes to all levels of government, i.e. state, federal or local. However an individual is eligible to pay tax only if they are residents as far as tax law is concerned and the taxation is applied on their world wide income. Liability to tax is determined on an annual basis. Taxes collected are meant to fund public service and also for redistribution of economic wealth. . The Australian government's financial year begins on July 1 and concludes on June 30 of the following year.
Income received by individuals is taxed at progressive rates, while income derived by companies is taxed at a flat rate of 30%. Residents are taxed based on income generated worldwide while non-residents are taxed on income generated within the borders of Australia, i.e. income that would be taxable in Australia. This is provided for under subsection 6 (1) of the ITAA (1936). Residency status for tax purposes is determined differently as compared to immigration issues. An individual is eligible for tax if: She/he is a permanent Australia residence and does not have a home abroad. The person relocated to Australia from another country on a permanent basisThe person’s residence is not in Australia but has been in Australia for six or more months.
The exception to this rule is if the person residence is outside Australia and that the person does not intend to reside in Australia or be there for more than two years been working in Australia for six continuous months on the same job or you have been living in the same place for six consecutive months. You have been in Australia for more than half a financial year and your home is outside Australia. The person gets a job abroad but his term of employment is is less than two years. For non-residence, income has to be gained within Australia for it to be taxed.
This may happen in case of the following: -The income was from Australian agent authorized to accept contract on behalf of non residents, meaning the agent accepts the offer in Australia. Income from a branch of an institution/ establishment based in Australia, and the head establishment has operated in Australia for at least six months.
Income from a contact by a non-resident signed in Australia, which would be performed within Australia, whose payment is made in Australian currency, one or both of the parties to the contact is an Australian residence. Brian Jones is liable to tax because of the following: -He is an Australian citizen, with a permanent resident in Austria. The medical practice is registered in his name and operated within Australia; therefore income from the practice is taxable. His income from the four months appointment is taxable since Australian law provides for taxation on residents worldwide income Brian Jones was in Australian for 71/2 months therefore liable for tax during the 1st July 2011 – 30th June 2012 financial year. Part II: Brian’s Taxable Income: -