Canberra

1. Overview of Taxation in Canberra, Australia

Canberra, as the capital city of Australia, follows the national taxation system governed by the Australian Taxation Office (ATO). Taxes in Australia are levied at the federal, state, and local levels, but the Goods and Services Tax (GST) is a federal tax applied uniformly across the country, including Canberra.

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2. Goods and Services Tax (GST)

The GST is a value-added tax of 10% applied to most goods, services, and other items sold or consumed in Australia.

Key Features of GST:

• Rate: 10% on most goods and services.
• Scope: Applies to goods, services, digital products, and imports.
• Exemptions: Some items are GST-free, such as:
  • Basic food (e.g., fresh fruits, vegetables, bread, milk).
  • Medical services and supplies.
  • Educational courses and materials.
  • Childcare services.
  • Exports (zero-rated).

For Visitors:

• Tourist Refund Scheme (TRS):
  • Visitors can claim a refund of GST paid on goods purchased in Australia if:
    • The total purchase is AUD 300 or more (from a single retailer).
    • The goods are taken out of Australia within 60 days of purchase.
    • The visitor has the original tax invoice.
  • Refunds can be claimed at the airport before departure.

For Businesses:

• Businesses with an annual turnover of AUD 75,000 or more must register for GST.
• Registered businesses can claim GST credits for the GST paid on business-related purchases.

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3. Income Tax in Canberra

Income tax in Australia is progressive, meaning the rate increases as income rises. It applies to individuals, businesses, and other entities.

For Individuals:

• Residents are taxed on their worldwide income, while non-residents are taxed only on Australian-sourced income.
• The 2023-2024 income tax rates for residents are as follows:
  • $0 - $18,200: 0% (tax-free threshold).
  • $18,201 - $45,000: 19%.
  • $45,001 - $120,000: 32.5%.
  • $120,001 - $180,000: 37%.
  • $180,001 and above: 45%.

For Non-Residents:

• Non-residents do not benefit from the tax-free threshold and are taxed at 32.5% on income up to $120,000, with higher rates for higher income brackets.

Medicare Levy:

• Residents pay a Medicare Levy of 2% of their taxable income to fund public healthcare.
• High-income earners without private health insurance may also pay a Medicare Levy Surcharge (1-1.5%).

Tax Returns:

• Individuals must lodge an annual tax return, typically between July 1 and October 31 for the previous financial year (July 1 - June 30).
• Tax returns can be lodged online via myTax (through the ATO website), through a registered tax agent, or by paper.

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4. Business Taxation in Canberra

Businesses in Canberra are subject to several taxes, including income tax, GST, and payroll tax (if applicable).

Corporate Tax Rates:

• Base rate entities (small businesses): 25% (for businesses with an aggregated turnover of less than AUD 50 million).
• Other companies: 30%.

Payroll Tax:

• Payroll tax is a state/territory tax, but in the Australian Capital Territory (ACT) (where Canberra is located), it applies to businesses with wages exceeding the threshold of AUD 2 million per year.
• The payroll tax rate in the ACT is 6.85%.

GST for Businesses:

• Businesses must:
  • Register for GST if their turnover exceeds AUD 75,000 (or AUD 150,000 for non-profits).
  • Lodge Business Activity Statements (BAS) monthly, quarterly, or annually to report GST collected and claim GST credits.

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5. Tax Considerations for Visitors

• Working Holiday Makers (Backpackers):

  • Visitors on working holiday visas (subclass 417 or 462) are taxed at 15% on income up to AUD 45,000.
  • Income above AUD 45,000 is taxed at resident rates.

• Superannuation for Temporary Residents:

  • Temporary residents working in Australia are entitled to superannuation contributions from their employer.
  • Upon leaving Australia, they can claim their Departing Australia Superannuation Payment (DASP), which is taxed at 35%.

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6. Tax Procedures

For Individuals:

1. Tax File Number (TFN):

   • A TFN is essential for working, lodging tax returns, and accessing government benefits.
   • Apply for a TFN online through the ATO or at a post office.

2. Lodging Tax Returns:

   • Use the ATO’s myTax platform or hire a registered tax agent.
   • Ensure all income, deductions, and offsets are reported accurately.

For Businesses:

1. Australian Business Number (ABN):

   • An ABN is required to register for GST and conduct business in Australia.
   • Apply online through the Australian Business Register (ABR).

2. Business Activity Statements (BAS):

   • BAS is used to report and pay GST, PAYG (Pay As You Go) withholding, and other taxes.
   • Lodged monthly, quarterly, or annually, depending on the business size.

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7. Tax Deductions and Offsets

For Individuals:

• Common deductions include:
  • Work-related expenses (e.g., uniforms, tools, travel).
  • Donations to registered charities.
  • Education expenses (if related to current employment).
• Tax offsets include:
  • Low and Middle Income Tax Offset (LMITO).
  • Private Health Insurance Rebate.

For Businesses:

• Deductions include:
  • Operating expenses (e.g., rent, utilities, wages).
  • Depreciation of assets.
  • Business travel expenses.

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8. Resources and Support

• Australian Taxation Office (ATO):
  • Website: www.ato.gov.au
  • Phone: 13 28 61 (for individuals) or 13 28 66 (for businesses).
• ACT Revenue Office:
  • Website: www.revenue.act.gov.au
  • Phone: (02) 6207 0028.
• Tax Clinics:
  • Free tax clinics are available for low-income earners and small businesses.

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9. Tips for Navigating Tax in Canberra

• Stay Organized: Keep records of all income, expenses, and receipts for at least 5 years.
• Use Online Tools: The ATO provides calculators and tools to estimate tax liabilities and refunds.
• Seek Professional Advice: Consult a registered tax agent for complex tax matters or business advice.
• Understand Deadlines: Ensure timely lodgment of tax returns and BAS to avoid penalties.

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This guide provides a detailed overview of tax and GST in Canberra, Australia. Whether you’re a resident, visitor, or business owner, understanding these systems will help you navigate your financial obligations effectively.