INCOME TAX = (TAXABLE INCOME x RATE) â TAX OFFSETS â s 4 ...
INCOME TAX = (TAXABLE INCOME x RATE) – TAX OFFSETS à s 4-‐10 TAXABLE INCOME = ASSESSABLE INCOME – DEDUCTIONS à s 4-‐15 Australian Resident – Individual -‐ Progressive tax rate -‐ For income >$180,000 marginal rate is 47%, includes budget repair levy of 2% Taxable income Tax on this income 0 -‐ $18,200
Nil
$18,201 -‐ $37,000
19c for each $1 over $18,200
$37,001 -‐ $80,000
$3,752 + 32.5c for each $1 over $37,000
$80,001 -‐ $180,000
$17,547 + 37c for each $1 over $80,000
$180,001 and over
$54,547 + 45c for each $1 over $180,000
Foreign Resident – Individual -‐ For income >$180,000 marginal rate is 47%, includes budget repair levy of 2% Taxable income Tax on this income 0 -‐ $80,000
32.5c for each $1
$80,001 -‐ $180,000
$26,000 + 37c for each $1 over $80,000
$180,001 and over
$63,000 + 47c for each $1 over $180,000
Medicare Levy Surcharge -‐ Basic levy payable = 2% Applicable from 1 July 2014 (previously 1.5%) Flat rate on taxable income à s 251S(1)(a) ITAA 1936 -‐ Medicare levy low income earner thresholds Threshold amount
Phase-‐in limit
Individual entitled to the seniors and pensioners tax offset
$32,279
$37,975
All other taxpayers
$20,542
$24,167
-‐ -‐
< “threshold amount” : full exemption from Medicare levy > “threshold amount” but < “phase-‐in-‐limit” = 10c for every $1 above “threshold amount” Exemption: ss 251T and 251U ITAA 1936 Income for surcharge purposes = Taxable income (including net amount on which family trust distribution tax has been paid) Exempt foreign employment income
-‐ -‐
Reportable fringe benefits amount Total net investment loss (includes both net financial investment loss and net rental property loss); and Reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions) Medicare Levy Surcharge = Taxable Income x Surcharge Rate Medicare levy surcharge rates Income ($) Surcharge Rate Singles
Families
0 – 90,000
0 – 180,000
0%
90,001 – 105,000
180,001 – 210,000
1%
105,001 – 140,000
210,001 – 280,000
1.25%
140,000+
280,001+
1.5%
-‐
Temporary budget repair levy o For resident and foreign individuals: 2% on taxable income exceeding $180,000 o Applies from 1 July 2014 to 30 June 2017 HELP Repayment rates -‐ HRI = Taxable Income + any total net investment loss, total reportable FB amounts, reportable superannuation contribution and exempt foreign employment income HELP Repayment Income (HRI) Repayment Rate Below $53,345
Nil
$53,345 -‐ $59,421
4.0%
$59,422 -‐ $65,497
4.5%
$65,498 -‐ $68,939
5.0%
$68,940 -‐ $74,105
5.5%
$74,106 -‐ $80,257
6.0%
$80,258 -‐ $84,481
6.5%
$84,482 -‐ $92,970
7.0%
$92,971 -‐ $99,069
7.5%
$99,070 and above
8.0%
Individual
s 6(1) ITAA 1936 4 tests of residence: 1. ordinary concepts (residence test) 2. domicile test 3. 183-‐day test 4. superannuation test
Taxpayer resident of Australia?
Company
s 6(1) ITAA 1936 3 tests of residence: 1. place of incorporation 2. central management and control 3. controlling shareholders
Australian resident taxed on income sourced in Australia and outside Australia
Foreign resident taxed on income sourced in Australia
Australian resident taxed on income sourced in Australia and outside Australia
Foreign resident taxed on income sourced in Australia
(s 995-‐1) ITAA 1997: “Australian resident” means a person who is a resident of Australia for the purposes of ITAA 1936 Ordinary Concepts -‐ Common law test -‐ “Resides” not defined in ITAA 1936 or 1997 -‐ Miller v FCT (1946): question of whether a person resides in Australia is question of fact and degree -‐ Levene v IRC (1928) and IRC v Lysaght (1928): leading authorities on what constitutes ordinary residence In Levene v IRC: temporary visits abroad à no permanent place of abode outside Australia since had not took lease in Monte Carlo In IRC v Lysaght: moved abroad à still Australian resident -‐ Joachim v FCT (2002): family home in Australia and intention to treat Australia home à although permanent place of abode outside Australia, still maintain a home for family in Australia and intention to treat Australia as home has not changed -‐ Broad factors to be considered: o Physical presence in Australia § General principle: necessary that taxpayer spends at least some time physically present in Australia during year of income o If visitor, the frequency, regularity and duration of visits – IRC v Lysaght o Purpose of visits to Australia and abroad o Maintenance of place of abode in Australia o Person’s family, business and social ties – Levene v IRC o Nationality – normally not a relevant factor, only if case is borderline
Nil
$18,201 -‐ $37,000
19c for each $1 over $18,200
$37,001 -‐ $80,000
$3,752 + 32.5c for each $1 over $37,000
$80,001 -‐ $180,000
$17,547 + 37c for each $1 over $80,000
$180,001 and over
$54,547 + 45c for each $1 over $180,000
Foreign Resident – Individual -‐ For income >$180,000 marginal rate is 47%, includes budget repair levy of 2% Taxable income Tax on this income 0 -‐ $80,000
32.5c for each $1
$80,001 -‐ $180,000
$26,000 + 37c for each $1 over $80,000
$180,001 and over
$63,000 + 47c for each $1 over $180,000
Medicare Levy Surcharge -‐ Basic levy payable = 2% Applicable from 1 July 2014 (previously 1.5%) Flat rate on taxable income à s 251S(1)(a) ITAA 1936 -‐ Medicare levy low income earner thresholds Threshold amount
Phase-‐in limit
Individual entitled to the seniors and pensioners tax offset
$32,279
$37,975
All other taxpayers
$20,542
$24,167
-‐ -‐
< “threshold amount” : full exemption from Medicare levy > “threshold amount” but < “phase-‐in-‐limit” = 10c for every $1 above “threshold amount” Exemption: ss 251T and 251U ITAA 1936 Income for surcharge purposes = Taxable income (including net amount on which family trust distribution tax has been paid) Exempt foreign employment income
-‐ -‐
Reportable fringe benefits amount Total net investment loss (includes both net financial investment loss and net rental property loss); and Reportable super contributions (includes both reportable employer super contributions and deductible personal super contributions) Medicare Levy Surcharge = Taxable Income x Surcharge Rate Medicare levy surcharge rates Income ($) Surcharge Rate Singles
Families
0 – 90,000
0 – 180,000
0%
90,001 – 105,000
180,001 – 210,000
1%
105,001 – 140,000
210,001 – 280,000
1.25%
140,000+
280,001+
1.5%
-‐
Temporary budget repair levy o For resident and foreign individuals: 2% on taxable income exceeding $180,000 o Applies from 1 July 2014 to 30 June 2017 HELP Repayment rates -‐ HRI = Taxable Income + any total net investment loss, total reportable FB amounts, reportable superannuation contribution and exempt foreign employment income HELP Repayment Income (HRI) Repayment Rate Below $53,345
Nil
$53,345 -‐ $59,421
4.0%
$59,422 -‐ $65,497
4.5%
$65,498 -‐ $68,939
5.0%
$68,940 -‐ $74,105
5.5%
$74,106 -‐ $80,257
6.0%
$80,258 -‐ $84,481
6.5%
$84,482 -‐ $92,970
7.0%
$92,971 -‐ $99,069
7.5%
$99,070 and above
8.0%
Individual
s 6(1) ITAA 1936 4 tests of residence: 1. ordinary concepts (residence test) 2. domicile test 3. 183-‐day test 4. superannuation test
Taxpayer resident of Australia?
Company
s 6(1) ITAA 1936 3 tests of residence: 1. place of incorporation 2. central management and control 3. controlling shareholders
Australian resident taxed on income sourced in Australia and outside Australia
Foreign resident taxed on income sourced in Australia
Australian resident taxed on income sourced in Australia and outside Australia
Foreign resident taxed on income sourced in Australia
(s 995-‐1) ITAA 1997: “Australian resident” means a person who is a resident of Australia for the purposes of ITAA 1936 Ordinary Concepts -‐ Common law test -‐ “Resides” not defined in ITAA 1936 or 1997 -‐ Miller v FCT (1946): question of whether a person resides in Australia is question of fact and degree -‐ Levene v IRC (1928) and IRC v Lysaght (1928): leading authorities on what constitutes ordinary residence In Levene v IRC: temporary visits abroad à no permanent place of abode outside Australia since had not took lease in Monte Carlo In IRC v Lysaght: moved abroad à still Australian resident -‐ Joachim v FCT (2002): family home in Australia and intention to treat Australia home à although permanent place of abode outside Australia, still maintain a home for family in Australia and intention to treat Australia as home has not changed -‐ Broad factors to be considered: o Physical presence in Australia § General principle: necessary that taxpayer spends at least some time physically present in Australia during year of income o If visitor, the frequency, regularity and duration of visits – IRC v Lysaght o Purpose of visits to Australia and abroad o Maintenance of place of abode in Australia o Person’s family, business and social ties – Levene v IRC o Nationality – normally not a relevant factor, only if case is borderline
