Tax Figures
Corporate Income Tax
Most companies pay instalments of tax on their income on a monthly or quarterly basis. Large companies with a turnover of AUD20 million or more are required to pay instalments on a monthly basis. A PAYG instalment system does not apply to companies with an annual tax liability of AUD8,000 that is not registered for GST. Corporations file an annual tax return with the Australian Taxation Office, generally due by the 15th of July.
Companies in Australia are generally taxed at a rate of 30% of their net income. This includes corporate limited partnerships, strata title bodies corporate, trustees of corporate unit trusts and public trading trusts.
Businesses with an annual turnover of less than $50 million are subject to a 27.5% tax on income.
Income Tax Rate
- 0 – 18,200: 0
- 18,201 – 37,000: 19%
- 37,001 – 90,000: 32.5%
- 90,001 – 180,000: 37%
- 180,001+: 45%
A Medicare levy of 2% on taxable income also applies to most residents.
An additional Medicare levy surcharge of 1% to 1.5% on taxable income is levied on individuals with taxable income equal to or exceeding $90,000 who do not have private health insurance.
Income earners with a taxable income of $37,000 or less are entitled to a low income tax offset of $445. This amount is reduced by 1.5 cents for every dollar over $37,000.
Payroll Tax
Payroll tax rates and thresholds in Australia differ between states and territories. If a company meets the minimum threshold it is held to the following rate:
- ACT – 6.85%
- New South Wales – 5.45%
- Northern Territory – 5.50%
- Queensland – 4.75%
- South Australia – 4.95%
- Tasmania – 6.1%
- Victoria – 4.85%
- Western Australia – 5.5%
Sales Tax
The government levies Goods and Services Tax (GST) at a rate of 10% on most goods and services. Some goods and services are GST-exempt such as food (with some exceptions), exports, and most health, medical and educational supplies.
Withholding Tax
- Dividends – 30%
- Interest – 10% (for non-residents) or marginal income tax rates (for residents)
- Royalties – 30% (for non-residents) or marginal income tax rates (for residents)
Other Tax
There are no state or municipal taxes on income in Australia.
Income Tax (Personal Allowance)
The tax-free threshold in Australia is AUD18,200.
Tax Year End Date
30 June
Tax Returns Supplied
Yes
Tax Year End Documents
- Payment summary with salary and deductions
- PAYG summary or Group Certificate*
*From 2018, Group Certificates are being phased out and ‘Single Touch Payroll’ is being introduced which allows employees to view their tax and payroll information via the myGov portal.
Are tax residents subject to tax on their global income
Tax residents are taxed on their global income.
Time to prepare and Pay Taxes
105 hours
Employers Social Security and statutory contributions
There is no social security in Australia. Employers are required to contribute 9.5% of an employee’s earnings base to a registered superannuation fund or retirement savings account on the employee’s behalf.
Employees Social Security and statutory contributions
If the employee does not have private health insurance, they are a Medicare Levy Surcharge applies to their taxable income.
The Medicare Levy Surcharge rates are as follows:
- Base Tier
- Medicare Levy Surcharge: 0%
- Single Threshold: $90,000 or less
- Family Threshold: $180,000 or less
- Tier 1
- Medicare Levy Surcharge: 1%
- Single Threshold: $90,001 – $105,000
- Family Threshold: $180,001 – $210,000
- Tier 2
- Medicare Levy Surcharge: 1.25%
- Single Threshold: $105,001 – $140,000
- Family Threshold: $210,001 – $280,000
- Tier 3
- Medicare Levy Surcharge: 1.5%
- Single Threshold: $140,001 or more
- Family Threshold: $280,001 or more
Payroll
Remote Payroll
A remote payroll in Australia is where a foreign company, i.e. a non-resident company, payrolls a resident employee in Australia. One option for a non-resident company to payroll its employees (local and foreign) in Australia is to use a fully outsourced service like a GEO which will employ and payroll the staff on their behalf.
Local Payroll Administration
In some cases, a company will register their business in Australia under one of the forms available, but prefer to have another company administer its payroll. This can be accomplished through a payroll provider. It is important to note that the company, as the Employer of Record, is still fully responsible for compliance with employment, immigration, tax and payroll regulations. But the payroll calculations, payments and filings can all be outsourced to the payroll provider.
Internal Payroll
Larger companies with a commitment to Australia may wish to run their own local payroll for all employees, foreign and local. In order to accomplish this, they will have to complete incorporation, register the business and then hire the necessary staff. There will be a need for in country human resources personnel who have the background needed to manage a Australian payroll, and can fulfill all tax, withholding, and payroll requirements.
This approach carries significant cost and requires some knowledge of local employment and payroll regulations. The company will need a local accounting firm and potentially legal counsel to ensure full compliance with Australian employment laws.
Setting up payroll in Australia
Currency
Australian Dollar – AUD
Employee Information Required
The following documents and information relating to the employee are required for setting up payroll:
- Proof of identity or citizenship
- For Australian citizens: valid Australian passport (photo identification page) only; or Australian citizenship/birth certificate accompanied by a driver’s licence
- For Australian permanent residents: Australian permanent residence visa label, accompanied by a valid overseas passport
- Tax File Number
- Superannuation Choice form
Tax Registration Requirements
The employee is required to register for a Tax File Number (TFN). This can be done through myGov portal. Foreign passport holders in Australia who are holders of a visa with work rights can apply for a TFN online here.
Social Security Registration
Australia does not have ‘Social Security’ as such but it does have welfare and public healthcare services which are primarily funded by taxpayers. A 2% Medicare levy applies to taxable income and is withheld via payroll under PAYG (Pay As You Go).
Documentation Required for New Employees
Minimum employment conditions, for employees in the national workplace relations system, are covered by the National Employment Standards (NES). Further conditions can be set by awards, agreements, and other industrial instruments.
Standard Payroll Cycle
Monthly
Standard Payment Date Per Month
The standard payment date is the 28th of every month.
Payment Mode
The majority of payments are made via bank transfer.
Frequency of Salary Payment
The most common pay cycles are 12, 26 and 52. 4-weekly or 24 pay periods a year are extremely rare.
Invoice / Payslips required
Payslips are required and must be provided within 1 working day of wages being paid. They may be provided electronically.
Minimum Wage
The national minimum wage is currently $18.93 per hours or $719.20 per 38-hour work week (as at 4 February 2019).
Each state has its own minimum wage. Employees paid under Industrial Awards have their own minimum wage based on the type of work they do, as classified by the Award.
