Taxation Services – What we offer
Tax Returns
Income Tax Returns
Income Tax Returns must be lodged annually for all taxpayers, reporting taxable income for the year. The Australian financial year runs from 1 July to 30 June. However, with ATO approval, companies can adopt a different accounting period known as a ‘substituted accounting period’ (SAP). A SAP is granted in limited circumstances, such as being a subsidiary of a foreign company with a different tax year. For instance, an Australian subsidiary of a US company may opt for a 31 December year-end with ATO approval.
The due dates for lodging tax returns depend on whether the taxpayer is an individual or a company and the year-end. Individual income tax returns are generally due by 31 October. For companies with a 30 June year-end, the due date is 28 February of the following year. The ATO publishes the lodgement due dates annually.
Fringe Benefits Tax Returns
A Fringe Benefits Tax (FBT) return must be lodged with the ATO, reporting fringe benefits provided from 1 April to 31 March. The FBT return is due by 31 May.
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Australian Taxation
New businesses setting up in Australia commonly encounter several taxes, including Income Tax, Goods and Services Tax (GST), Fringe Benefits Tax (FBT), and Superannuation.
Income Tax
Taxation of Companies
An Australian resident company is subject to Australian tax on its income from all sources, both domestic and international. Companies incorporated in Australia are generally considered Australian residents. Companies with a turnover of less than $10 million are taxed at 25%, while those exceeding $10 million are taxed at 30%.
A company can distribute dividends to shareholders without further tax withholding, provided the dividends are distributed from profits after tax (known as franked dividends). Otherwise, a 30% dividend withholding tax applies, which may be reduced for shareholders from countries with which Australia has a tax treaty.
Transactions with international related parties must comply with Transfer Pricing Guidelines, ensuring that pricing is determined on an arm’s-length basis.
Taxation of Foreign Branches
The taxable income of a foreign branch is taxed at 30% and is calculated similarly to a company, except that a branch is only taxable on income from Australian sources. A foreign investor generally does not have a taxable presence in Australia if there is no ‘Permanent Establishment’ as defined in the applicable tax treaty.
Taxation of Individuals
Businesses sending employees to work in Australia must consider how these employees will be taxed, particularly if they come from countries with lower tax rates than Australia. Income tax is calculated on an individual’s taxable income and charged at progressive rates. Individuals are classified as residents, temporary residents, or non-residents for tax purposes.
A resident of Australia is liable for Australian income tax on worldwide income and capital gains. Non-residents and temporary residents are generally liable for Australian income tax only on income sourced in Australia. Temporary residents may be taxed on worldwide income in limited cases, such as salary and wage income.
Every person’s circumstances are different, and various tax credits, tax offsets (rebates), levies, liabilities, and tax treaty provisions may apply. Under Australian law, tax rates differ for residents and non-residents. Resident individuals pay tax on their taxable income at progressive rates ranging from 0 to 45 percent.
For tax rate please refer to the link
Tax rates – Australian resident
Fringe Benefits Tax (FBT)
FBT is levied on employers for benefits provided to employees. Examples include housing allowances, private use of employer-provided vehicles, entertainment, and private health insurance. Benefits are grossed up, and FBT is imposed at 47% on the grossed-up value. Some benefits, such as superannuation, are exempt from FBT, while others, like motor vehicles, are concessionally taxed. The intent is that employers pay FBT equivalent to the income tax an employee on the top marginal rate would have paid if they purchased the benefit themselves with after-tax income. FBT is deductible for income tax purposes.
Given the high FBT rate, it is important to plan and structure compensation and benefits carefully. FBT returns must be lodged with the ATO by 31 May, covering benefits provided from 1 April to 31 March.
Payroll Taxes
Payroll tax is payable by employers based on the amount of wages they pay in Australia. Each state has separate payroll tax rates and exemption thresholds. Payroll tax is only payable when the total Australian wages paid by an employer reach the threshold.
Our team at KGBM Corporate Services is ready to assist with your taxation needs, ensuring compliance and optimizing your tax position.
