Appendix A: Description of revenue heads
Income taxation
1. Individuals and other withholding taxation
These revenue heads broadly cover all personal income tax. A schedule of the legislated personal income tax rates from 1 July 2010 is provided in Table 2.
As part of the introduction of a carbon pricing mechanism (CPM), significant changes have been made to the personal income tax rates and thresholds, including more than trebling the tax free threshold from $6,000 to $18,200. These changes were made effective on 1 July 2012.
1.1. Gross income tax withholding (ITW)
The bulk of ITW revenue arises from the pay-as-you-go (PAYG) withholding system, under which taxes are withheld from wage and salary income.
ITW also includes all other withholding taxes levied on natural resource payments, dividends, interest and royalties paid to non-residents, payments to Australian indigenous groups for the use of land for mineral exploration and mining, and amounts withheld because no tax file number or Australian business number (ABN) was quoted — these taxes are often withheld from companies, rather than individuals. It also includes applicable Medicare levy revenue.
1.2. Gross other individuals’ income tax
Gross revenue from other individuals consists of income tax paid by individuals other than that collected through the PAYG withholding system, and includes applicable Medicare levy revenue. It comprises:
- PAYG instalments paid directly by individuals — that is, not withheld by employers; and
- debit assessments on income tax returns lodged after the end of each financial year (which arise when tax credits are insufficient to meet the final tax liability, requiring taxpayers to make an additional payment for the difference).
Taxpayers in this category derive their income from many sources, including:
- profits from small unincorporated businesses, primary production and investment activities;
- wages and salaries (when PAYG withholding credits are insufficient to meet the tax liability on assessment); and
- capital gains.
Most revenue from other individuals is collected directly from the taxpayer through the PAYG instalment system. Individuals with annual tax liabilities of $8,000 or more and individuals who are registered for the GST will generally make quarterly payments. Individuals who have annual taxation liabilities of less than $8,000 and are not registered for the GST have the choice of making quarterly payments or an annual payment.
1.3. Income tax refunds for individuals
A final assessment of the income tax liabilities of individual taxpayers is normally made on the basis of returns lodged after the end of each financial year. Refunds from the Australian Tax Office (ATO) are made where tax credits to an individual exceed their final liability on assessment.
1.4. Medicare levy
The amount of Medicare levy paid is based on an individual’s taxable income and is normally calculated at 1.5 per cent of taxable income, but this rate may vary depending on circumstances. An individual may be exempt from the levy or may pay a reduced levy if the taxpayer has a low income.
Individuals and families on higher incomes who do not have an appropriate level of private health insurance may also have to pay the Medicare levy surcharge, which is currently calculated at an additional 1.0 per cent of taxable income. Effective from 1 July 2010, surcharge rates of 1.0, 1.25 and 1.5 per cent are tiered across three bands of income, with the surcharge rate increasing with income.
1.5. Low income tax offset (LITO)
The LITO provides targeted tax relief to low and middle income earners. Effective from 1 July 2012, the LITO decreased from $1,500 to $445 as part of the introduction of a CPM. The LITO is withdrawn at 1.5 cents for each additional dollar earned above the income level of $37,000. LITO recipients receive a small amount of the benefits of the LITO through their regular pay, with the remainder claimable when their income tax return is assessed.
Because of changes to the tax free threshold as part of the introduction of a CPM, those eligible for the full LITO will not pay tax after assessment until their annual income exceeds at least $20,542, up from an effective tax-free threshold of $16,000 in 2011-12.
1.6. Fringe benefits tax (FBT)
FBT is payable by employers on the value of certain non-cash benefits that have generally been provided to their employees. The intent of the FBT is to improve the fairness of the tax system, by ensuring that tax cannot be avoided by paying employees in benefits rather than cash. The employer is liable to pay FBT. Since 1 April 2006, FBT has been levied at 46.5 per cent of the grossed-up taxable value of benefits (which includes any right, privilege, service or facility provided in respect of employment), as calculated under FBT rules.
2. Taxation on superannuation funds
These taxes cover all income taxes generally paid by superannuation funds on behalf of their members on their contributions and earnings. Complying funds are currently subject to a 15 per cent tax rate while non-complying funds pay a 45 per cent tax rate. The concessional taxation treatment of superannuation is designed to encourage superannuation saving for retirement. Contributions made to a superannuation fund, and the earnings on those contributions, are taxed through the PAYG instalment system.
Superannuation funds are taxed generally at a concessional rate of 15 per cent in relation to taxable contributions received, realised capital gains and investment income. Only two-thirds of a capital gain is included in assessable income if the asset is held for at least 12 months.
Life insurers and retirement savings account (RSA) providers also provide superannuation products. Tax on superannuation related contributions, realised capital gains and investment income in life insurers and RSA providers is levied at the same rates as applies to superannuation funds but is paid through the company income tax system.
Table 2: Personal income tax rates(a)
| |
From 1 July 2010 |
|
From 1 July 2011 |
|
From 1 July 2012 |
|
From 1 July 2013 |
|
Taxable income |
Per cent |
|
Taxable income |
Per cent |
|
Taxable income |
Per cent |
|
Taxable income |
Per cent |
|
|
|
|
|
|
|
|
|
|
|
|
| Residents |
$0–$6,000 |
Nil |
|
$0–$6,000 |
Nil |
|
$0–$18,200 |
Nil |
|
$0–$18,200 |
Nil |
|
$6,001–$37,000 |
15 |
|
$6,001–$37,000 |
15 |
|
$18,201–$37,000 |
19 |
|
$18,201–$37,000 |
19 |
|
$37,001–$80,000 |
30 |
|
$37,001–$80,000 |
30 |
|
$37,001–$80,000 |
32.5 |
|
$37,001–$80,000 |
32.5 |
|
$80,001–$180,000 |
37 |
|
$80,001–$180,000 |
37 |
|
$80,001–$180,000 |
37 |
|
$80,001–$180,000 |
37 |
|
> $180,000 |
45 |
|
> $180,000 |
45 |
|
> $180,000 |
45 |
|
> $180,000 |
45 |
|
|
|
|
|
|
|
|
|
|
|
|
| Non-residents |
$0–$37,000 |
29 |
|
$0–$37,000 |
29 |
|
|
|
|
|
|
|
$37,001–$80,000 |
30 |
|
$37,001–$80,000 |
30 |
|
$0–$80,000 |
32.5 |
|
$0–$80,000 |
32.5 |
|
$80,001–$180,000 |
37 |
|
$80,001–$180,000 |
37 |
|
$80,001–$180,000 |
37 |
|
$80,001–$180,000 |
37 |
|
> $180,000 |
45 |
|
> $180,000 |
45 |
|
> $180,000 |
45 |
|
> $180,000 |
45 |
| Medicare levy(b) |
$0–$18,839 |
Nil |
|
$0–$19,404 |
Nil |
|
$0–$20,542 |
Nil |
|
$0–$20,542 |
Nil |
| (for singles) |
$18,840-$22,163 |
10% of >$18,839 |
|
$19,405-$22,828 |
10% of >$19,404 |
|
$20,543-$24,167 |
10% of >$20,542 |
|
$20,543-$24,167 |
10% of >$20,542 |
|
> $22,163 |
1.5 |
|
> $22,828 |
1.5 |
|
> $24,167 |
1.5 |
|
> $24,167 |
1.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount |
|
|
Amount |
|
|
Amount |
|
|
Amount |
| Low Income |
$0-$30,000 |
$1,500 |
|
$0-$30,000 |
$1,500 |
|
$0-$37,000 |
$445 |
|
$0-$37,000 |
$445 |
| Tax Offset |
$30,001-$67,500 |
less 4%
of >$30,000 |
|
$30,001-$67,500 |
less 4%
of >$30,000 |
|
$37,001-$66,666 |
less 1.5%
of >$37,000 |
|
$37,001-$66,666 |
less 1.5%
of >$37,000 |
|
> $67,500 |
Nil |
|
> $67,500 |
Nil |
|
> $66,666 |
Nil |
|
> $66,666 |
Nil |
(a) This table includes legislated changes to tax rates and thresholds, excluding temporary changes such as the Temporary Flood and Cyclone Reconstruction Levy in 2011-12.
Source: 2012-13 Budget.
3. Company and other related income taxation
These revenue heads broadly cover all income taxes paid by corporate type entities.
3.1. Company income taxation
Company income taxation is levied at a rate of 30 per cent on all taxable income earned by companies, including incorporated and unincorporated associations, limited partnerships and some corporate unit trusts and public trading trusts. Special tax rates apply to pooled development funds and to certain classes of taxable income of life insurance companies, credit unions, non-profit companies and retirement savings account providers.
Generally, every resident company that derives assessable income (including capital gains), whether sourced within or outside of Australia, and every non-resident company that derives assessable income from Australian sources is required to pay company tax.
Company income tax serves two primary purposes.
- In respect of that portion of company profits attributable to resident shareholders, company income tax is a withholding tax. Resident shareholders declare the dividends they receive from the company in their personal taxable income, they receive a credit for tax paid by the company and they can use the credit to offset their personal income tax liability.
- In respect of that portion of company profits attributable to non-resident shareholders, company income tax may be the final taxing point. Credits for tax paid by the company may not be available for use by non-residents.
3.2. Resource rent taxes
Petroleum resource rent tax (PRRT) is levied at a rate of 40 per cent on taxable profit in respect of offshore petroleum projects other than some of the North-West Shelf production areas, which are subject to excise (included in excise on petroleum and other fuel products) and royalties. The amount paid is deductible from a company’s taxable income when determining its company tax liability. The tax aims to ensure an equitable return accrues to the community for access to Australia’s non-renewable petroleum resources and to provide a fiscal regime that encourages the exploration and production of petroleum by taxing only after a threshold rate of return is reached.
The Australian Government has introduced a Minerals Resource Rent Tax (MRRT) on the profits derived from new and existing iron ore and coal projects. The MRRT, effective from 1 July 2012, is levied at 30 per cent on taxable profit for mining projects that exceed $75 million per annum. This reform ensures that the Australian people will receive a better return from the exploitation of its non-renewable resources.
Indirect taxes
1. Carbon pricing mechanism (CPM)
The Australian Government introduced a CPM on polluters who emit more than 25,000 tonnes of CO2-equivalent a year, effective from 1 July 2012. From 1 July 2012 the CPM has involved a fixed price starting at $23 per tonne of CO2-equivalent emissions, rising by 2.5 per cent each year in real terms.
From 1 July 2015, a floating market-based Emission Trading Scheme (ETS) will commence whereby the Government will set a cap on emissions, and the market will determine the price of permits. During the first three years of the scheme, until 30 June 2018, there will be a transitional price ceiling to manage price volatility. The price ceiling for 2015-16 will be set at $20 above the expected international carbon price, rising by 5 per cent each year in real terms in 2016-17 and 2017-18.
2. Sales taxes
2.1. Goods and services tax (GST)
The GST is a broad-based, indirect tax levied at a rate of 10 per cent on most goods and services consumed in Australia. The GST is estimated to be levied on around 56 per cent of total household consumption with key exclusions being basic food items, health care, child care, rent and education. Exports are not consumed in Australia and therefore are exempt from the GST.
In accordance with the Intergovernmental Agreement on Federal Financial Relations, the Australian Government administers the GST on behalf of the States and Territories, which receive GST revenues.
2.2. Wine equalisation tax (WET)
All wines, meads, perries, ciders and sakes are subject to WET. Unlike alcohol excises, WET is an ad valorem tax. It is calculated at a rate of 29 per cent of the final wholesale price or, in certain other permitted circumstances, of a nominal wholesale value calculated as 50 per cent of the retail price, or alternatively at the average wholesale price for identical wine.
A maximum rebate of $500,000 is payable annually to wine producers or producer groups.
2.3. Luxury car tax (LCT)
The LCT, currently set at 33 per cent, is a single stage tax that is calculated on the value of the car that exceeds the luxury car tax threshold. The luxury car threshold for the 2012‑13 financial year is $75,375 for fuel-efficient cars or $59,133 for other cars. The LCT threshold is usually indexed using the CPI and the fuel-efficient cars rate is indexed annually using the motor vehicle purchase component of the CPI, which is composed of observed price movements for new vehicles sold in Australia. If the change in the motor vehicle purchase component of the CPI is negative, the threshold is not reduced.
The fuel efficient car limit replaces the luxury car tax threshold for cars with a fuel consumption not exceeding seven litres per 100 kilometres as a combined rating under vehicle standards in force under Section 7 of the Motor Vehicle Standards Act 1989.
3. Excise
The major categories of excisable products are petroleum and other fuel products, crude oil, oils and lubricants, tobacco and alcoholic beverages (other than wine). Equivalent duties on identical imported products are imposed through, and reported under, customs duty.
Petroleum and other fuel excise includes excise on petrol (gasoline), diesel, fuel ethanol, bio diesel, blends, aviation gasoline, aviation kerosene, fuel oil, heating oil and kerosene. It is imposed at specific rates per litre of product.
Excise on aviation fuel is channelled to fund the Civil Aviation Safety Authority (CASA). The current excise rates are 8.616 cents per litre for aviation gasoline and 9.536 cents per litre for aviation kerosene. The excise increased on 1 July 2012 from 3.556 cents per litre to include the carbon price. As aviation gasoline and kerosene have different carbon emissions, they have different excise rates from 1 July 2012.
Crude oil excise provides a return to the community for the exploitation of its natural resources. The rate of excise varies according to the quantity sold, the sale price, and the dates of discovery and development of the oil field. The crude oil excise regime applies to:
- crude oil production from offshore fields in the North-West Shelf production licence areas that are not subject to petroleum resource rent tax;
- crude oil production from onshore fields and fields in coastal waters; and
- condensate production from petroleum fields located in the North-West Shelf Project area and onshore Australia (brought into the crude oil excise regime on 13 May 2008). Condensate is light oil extracted from ‘wet’ gas and primarily processed for use in motor vehicles.
Other excise is derived from beer, spirits, other alcoholic beverages (other than wine) and tobacco products.
- For beer, spirits and other alcoholic beverages, excise is imposed on the alcohol content. The excise rate on commercial beer in containers greater than 48 litres (draught beer) is lower than for other commercial beer.
- Beer for personal consumption (non-commercial beer) brewed in commercial facilities attracts duty at a reduced rate, equivalent to 7 per cent of the applicable beer excise.
- From 1 August 2011, the excise on ‘other excisable beverages’ was increased to the rate on full strength spirits. Other excisable beverages are those not exceeding 10 per cent by volume of alcohol and include most ‘ready-to-drink’ alcoholic beverages.
- Excise is imposed on a per stick basis for cigarettes that do not exceed 0.8 grams (actual tobacco content) and on a per kilogram basis for other tobacco products.
- The excise on cigarettes and loose leaf tobacco is $0.34889 per stick and $436.13 per kilogram respectively, effective from 1 August 2012. This excise increase also applied to excise-equivalent customs duty on comparable imported tobacco products.
- Wine is not subject to excise, but is subject to the wine equalisation tax.
Table 3: Excise rates(a)
| Commodity |
Rates
applying
from
2 Aug 2010
$ |
Rates
applying
from
1 Feb 2011
$ |
Rates
applying
from
1 Aug 2011
$ |
Rates
applying
from
1 Feb 2012
$ |
Rates
applying
from
1 Aug 2012 (b)
$ |
| Petroleum and other fuel products (per litre) |
|
|
|
|
|
| Gasoline |
0.38143 |
0.38143 |
0.38143 |
0.38143 |
0.38143 |
| Diesel |
0.38143 |
0.38143 |
0.38143 |
0.38143 |
0.38143 |
| Ethanol and biodiesel |
0.38143 |
0.38143 |
0.38143 |
0.38143 |
0.38143 |
| Blends of the above |
0.38143 |
0.38143 |
0.38143 |
0.38143 |
0.38143 |
| Aviation gasoline |
0.03556 |
0.03556 |
0.03556 |
0.03556 |
0.08616 |
| Aviation kerosene |
0.03556 |
0.03556 |
0.03556 |
0.03556 |
0.09536 |
| Other petroleum products |
0.38143 |
0.38143 |
0.38143 |
0.38143 |
0.38143 |
| Greases (per kilogram) |
0.05449 |
0.05449 |
0.05449 |
0.05449 |
0.05449 |
| Oils and lubricants, excluding greases (per litre) |
0.05449 |
0.05449 |
0.05449 |
0.05449 |
0.05449 |
| Beer (per litre of alcohol over 1.15 per cent) |
|
|
|
|
|
| Draught beer, low strength |
7.25 |
7.33 |
7.51 |
7.56 |
7.61 |
| Draught beer, mid strength |
22.76 |
23.01 |
23.59 |
23.73 |
23.87 |
| Draught beer, high strength |
29.78 |
30.11 |
30.86 |
31.05 |
31.24 |
| Other beer, low strength |
36.31 |
36.71 |
37.63 |
37.86 |
38.09 |
| Other beer, mid strength |
42.31 |
42.78 |
43.85 |
44.11 |
44.37 |
| Other beer, high strength |
42.31 |
42.78 |
43.85 |
44.11 |
44.37 |
| Non-commercial, low strength |
2.55 |
2.58 |
2.64 |
2.66 |
2.68 |
| Non-commercial, mid and high strength |
2.95 |
2.98 |
3.05 |
3.07 |
3.09 |
Other beverages, not exceeding
10 per cent alcohol content
(per litre of alcohol) |
71.67 |
72.46 |
74.27 |
74.72 |
75.17 |
| Potable spirits (per litre of alcohol) |
|
|
|
|
|
| Brandy |
66.92 |
67.66 |
69.35 |
69.77 |
70.19 |
Other spirits, exceeding 10 per cent
alcohol content |
71.67 |
67.66 |
74.27 |
74.72 |
75.17 |
Cigarettes, cigars and tobacco (tobacco
content of 0.8 grams or less per stick) |
0.33267 |
0.33633 |
0.34474 |
0.34681 |
0.34889 |
| Tobacco products (per kilogram) |
415.86 |
420.43 |
430.94 |
433.53 |
436.13 |
(a) The rate of excise on crude oil and condensate is not provided in this table as it varies according to the quantity sold, the sale price, and the dates of discovery and development of the oil field.
(b) The rates for aviation fuel apply from 1 July 2012.
Source: 2012-13 Budget and ATO Excise Tariff Schedule (1 August 2012).
3.1. Excise indexation
The rates of duty for alcohol and tobacco products (Table 3) are adjusted every August and February in line with half-yearly consumer price index (CPI) movements. If the change in the CPI is negative, the excise rate is not reduced. Instead the decline is carried forward to be offset against the next positive CPI movement.
4. Customs duty
Customs duty is generally imposed as a percentage of the value of the imported good but is on a volumetric basis (where duty is applied per unit of quantity) for excise-equivalent products. In general, other dutiable goods attract a general tariff rate of 5 per cent.
Tariffs on passenger motor vehicles and textile, clothing and footwear are estimated to account for around 20 per cent of the total duty in 2012-13. Approximately 60 per cent of customs duty revenue in 2012-13 is expected to be derived from duty imposed on imports of petroleum products, tobacco, beer and spirits, which is akin to excise duty on these items.
4.1. Tariffs
Tariff rates are shown in Table 4. The Government is implementing a program of trade liberalisation through bilateral free trade agreements and tariffs reductions. Trade liberalisation reduces the Government’s revenue from tariffs (included in customs duty).
Table 4: Tariff rates
| |
Applying from
11 May 2005
Per cent |
Applying from
1 January 2010
Per cent |
Applying from
1 January 2015
Per cent |
| General tariff(a) |
5 |
5 |
5 |
| Passenger motor vehicles(b) |
10 |
5 |
5 |
| Textiles, clothing and footwear |
|
|
|
| Clothing and finished textiles |
17.5 |
10 |
5 |
| Cotton sheeting, fabric, carpet and footwear |
10 |
5 |
5 |
| Sleeping bags, table linen and footwear parts |
7.5 |
5 |
5 |
| Tariff concession order |
0 |
0 |
0 |
(a) The general tariff of 5 per cent applies to most manufactured goods. Many goods, including primary products, textiles, clothing and footwear and other manufactured goods have free rate of duty.
(b) This category includes new passenger vehicles and off-road vehicles and parts. Used or second-hand vehicles are subject to an additional impost of $12,000.
Source: 2012-13 Budget.
Other taxation
1. Agricultural levies
Agricultural levies and charges are used to fund industry activities, such as research and development, marketing and promotion, residue testing, and animal health programs. The need for a levy is usually identified by the industry itself and the levy is generally collected at the first point of sale of the primary produce or point of further processing. All levies and charges are paid into the Consolidated Revenue Fund without deduction and then disbursed to fund the relevant program.
2. Other taxes
The major contributors to this category are the passenger movement charge and import processing and depot charges administered by the Australian Customs Service.
Other contributors include broadcasting licence fees, which are payable by all commercial radio and television licensees and are calculated as a percentage of licensees’ gross earnings for the previous year, as well as the superannuation guarantee charge and the universal service obligation levy.
Next:
Appendix B: Classification of Australian Government taxes
Previous:
Part 2: Australian Government taxes
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