The Australian tax year for most businesses ends on June 30. However, it is possible to apply for a substituted accounting period (SAP) that varies the year-end to coincide with the financial year of a foreign parent company.

Australian tax laws are amended frequently in response to changes both at the domestic level, such as changes in government, and at the international level, such as the Organisation for Economic Co-operation and Development’s (OECD) recent Base Erosion and Profit Shifting (BEPS) initiative. Careful consideration should be given to the nature of the business to be conducted in Australia and any resulting tax implications.

The federal government levies income tax, goods and services tax (GST), fringe benefits tax and capital gains tax, among others. State and territorial governments levy payroll tax, land tax and stamp duty, among others.

In this chapter

• Legal system
• Taxation authorities
• Business vehicles
• Financing a corporate subsidiary
• Direct taxes
• Cross-border payments
• Indirect taxes – GST
• Other indirect taxes

Legal system

Australia, its six states and its two territories operate under common law. Both the federal government and state governments have lawmaking power. However, the federal government’s legislative power is limited to the exclusive heads of power set out in section 51 of the Australian Constitution. State governments are able to legislate on all other matters.

Taxation authorities

The Australian Taxation Office (ATO) is the federal authority responsible for overseeing and enforcing federally imposed taxes. The Federal Commissioner of Taxation makes decisions and gives opinions on federal tax laws.

The principal direct tax is income tax, which is levied by the federal government and administered by the Federal Commissioner of Taxation, who is responsible for the operation of the ATO. The main laws governing income tax are the Income Tax Assessment Act 1936 (Cth), the Income Tax Assessment Act 1997 (Cth) and the Taxation Administration Act 1953 (Cth).

Each state and territory also has its own taxation oversight body:

Business vehicles

Determining the residency status of a business vehicle is essential in understanding how Australian taxation law will apply to that individual or entity. A non-resident can carry out business in Australia through an Australian resident entity or a foreign entity, though different processes for registration and reporting will apply depending on the choice.

Companies

A company is an Australian resident for tax purposes if it is incorporated in Australia. A company will also be considered to be resident in Australia if it carries on business in Australia and either (i) its central management and control is in Australia or (ii) its voting power is controlled by shareholders who are resident in Australia.

The previous Australian government proposed to amend the residency test such that a company that is not incorporated in Australia will be deemed an Australian resident for tax purposes if it has a “significant economic connection to Australia”. It remains unclear whether this proposal will proceed with the new Australian government. If enacted, the new residency test will apply to the first income year after the date of Royal Assent of the enabling legislation; however taxpayers will have the option of applying the new law from March 15, 2017.

As a general rule, if the company’s directors usually carry on business and make decisions in Australia, the residency test will be satisfied. Again, residency is a question of fact decided in each case by reviewing the company’s business or trading activities.

Companies can be either proprietary or public companies. The types of companies that can be established include those limited by guarantee, limited by shares, unlimited with share capital or having no liability (this last only applies to certain mining companies).

Alternatively, a foreign entity can also register an Australian branch, rather than incorporating an Australian subsidiary company.

Partnerships

A partnership is an association of people who carry on business together, and can be with up to 20 people. Partnerships can be either general or limited, and are governed by state or territory legislation. Members of the partnership are personally liable for the debts of the partnership.

The residence of a general partnership is determined by the individual partners’ residency status. A limited partnership will be a resident of Australia if the partnership was formed in Australia, if it carries on business in Australia or if it has central management located in Australia.

Trusts

Trust structures are also commonly used as business and investment vehicles. Trusts may be characterized as residents for tax purposes if, during a financial year, the trustee of the trust is a resident or the trust’s central management and control is in Australia.

Financing a corporate subsidiary

Debt finance

In Australia, companies can be financed using debt, where the company borrows from external lenders. If a company uses debt financing, it is able to retain full control of its business and governance, and typically, the interest on repayments is tax deductible (subject to restrictions under the thin capitalization rules).

Equity finance

Companies can also be financed through equity. Common ways that equity financing can be achieved include private equity investors, venture capitalists and an initial public offering on the Australian Stock Exchange.

The tax treatment of raising capital through equity financing will depend on the nature of the transaction.

Tests for debt and equity

Australia has tests for debt and equity interests, which determine whether a particular arrangement gives rise to a debt interest or an equity interest. These tests are set out in Division 974 of the Income Tax Assessment Act 1997 (Cth). Whether an interest is debt or equity is relevant in determining if returns are subject to interest or dividend withholding tax.

Investment income and royalties paid to foreign residents

Companies, whether Australian residents or foreign residents with a permanent establishment in Australia, may be required to withhold tax from investment income and royalties paid to non-residents.

Taxation of financial arrangements

Special rules for the Taxation of Financial Arrangements (TOFA) determine the tax treatment of gains and losses on financial arrangements, which usually only apply to large taxpayers. The TOFA rules are aimed at reducing the influence of tax consideration on how financial arrangements are structured.

Direct taxes

Income tax is assessed on individuals, companies and trusts. Federal income tax returns must be filed annually. The income tax system is based on self-assessment, with the ATO conducting random or systematic audits as a way of monitoring and verifying the self-assessments. Some large businesses choose to participate in voluntary compliance programs with the ATO.

Partnerships are subject to pass through tax treatment. Participants in joint ventures who take a share in the product of the venture are generally taxed as separate taxpayers.

Australian residents are subject to tax on worldwide income, but tax credits may be available where foreign tax is paid by a resident taxpayer for income derived from a foreign source. Non-residents are normally taxed on income derived from Australian sources only.

Corporate income tax

The general income tax rate for companies is currently 30%, although a reduced rate is available for small businesses. Most businesses are required to pay quarterly “pay as you go” (PAYG) instalments throughout the year based on their estimated tax liability, although it is necessary to file an annual tax return to determine their actual income tax liability for the year.

Income tax is payable on “taxable income,” which is calculated by deducting allowable deductions from assessable income. Allowable deductions include certain deductions for expenses incurred in carrying on business and capital allowances for depreciating assets. Deductions may also be allowed for losses carried forward from previous years.

Where allowable deductions exceed the amount of assessable income for a particular financial year, the taxpayer incurs a tax loss. Generally, tax losses can be carried forward indefinitely (subject to certain continuity rules). When determining the future taxable income of a company, a tax loss may only be deducted against future taxable income if the company satisfies the “continuity of ownership” test, or in some instances, the “same business” test.

Capital gains tax (CGT)

Tax is also payable on capital gains derived from the disposal of most capital assets, although foreign residents are generally only taxed on transactions involving Australian real property. The net capital gains of the taxpayer (capital gains reduced by capital losses) are included in the taxpayer’s total assessable income in the same way as other items of assessable income. A net capital loss may be carried forward and offset against future capital gains.

CGT applies to a wide range of events, such as an asset disposal, which affects most forms of property or enforceable rights. In broad terms, the CGT liability is determined by subtracting the cost base of the asset from the capital proceeds for the event. Gains are assessed on realization or another specified event (such as ceasing to be an Australian resident), and are not usually assessed on an accrual basis.

The ordinary income tax rates apply to capital gains. However, resident individuals (and certain trust structures) may be eligible for a 50% discount on CGT if they have held the asset for at least 12 months. There are a range of concessions and deferral mechanisms for businesses and individuals. Non-residents are generally taxed only on capital gains derived from “taxable Australian property,” such as land, indirect interests in land and mining or prospecting rights.

Imputation system

Dividends paid by Australian resident companies from profits that have already been taxed may carry franking credits for the tax paid by the company. Dividends are referred to as “fully franked,” “partially franked” or “unfranked,” depending on the extent to which a company has chosen to use its franking credits for the distribution. Special rules ensure uniformity of franking on distributions during a franking period. Non-resident shareholders are not eligible for credits or rebates on franked distributions. Rather, dividends paid to non-resident shareholders may be subject to withholding tax if the distributions are not fully franked. Withholding tax does not apply to “fully franked” distributions.

Tax consolidation

The consolidation regime allows qualifying groups of Australian resident entities (companies, trusts and partnerships, but excluding branches) to be treated as a single entity for income tax purposes. This is a “one-in-all-in” election, meaning that each wholly owned subsidiary will automatically and irrevocably become a member of the group for Australian tax purposes.

An important benefit of choosing to consolidate is that the consolidated group will generally be required to file only one income tax return and one franking account for the consolidated group. Once a consolidated group is formed, intra-group transactions will be ignored for tax purposes. Examples of such intra-group transactions include asset transfers, loans, payments of dividends and returns of capital. Under the “single entity” rule, losses attributable to the operations of a group member may be offset against income generated by other group members.

Multiple-entry consolidated groups

The consolidations regime includes rules for foreign-owned groups with entry points into Australia via multiple Australian holding companies. These rules allow flexibility in defining the consolidated group. Such groups are known as multiple-entry consolidated groups.

Administration of consolidated groups

The entity responsible for filing the group’s tax return (referred to as the “head company”) is the entity that is also responsible for ensuring the group’s income tax liability is paid. However, it is important to note that the other members of the group may be jointly and severally liable for the total income tax liability of the group if the head company defaults on its payment obligations to the ATO.

One way the group members may mitigate the risk of joint and several liabilities arising (which is particularly relevant if a member has or may eventually exit the group) is for each group member to enter into a valid tax-sharing agreement that allocates the tax liabilities of the group to each of its members. Where tax-sharing arrangements are in place, in the event of a default by the head company, an individual member’s liability may be limited to its allocation of income tax provided under the agreement.

Cross-border payments

Transfer pricing rules

Transfer pricing rules seek to counter international profit-shifting techniques by ensuring that related parties to international transactions determine their pricing based on arm’s length methodologies.

These rules allow the Tax Commissioner to reallocate income or adjust deductions to reflect an arm’s length arrangement. The rules extend to branches or divisions of the same enterprise, where non-arm’s length transactions are made between an Australian permanent establishment and an overseas permanent establishment of the same enterprise.

Country by country reporting

New country-by-country reporting rules affect significant global entities, which includes Australian-headquartered groups and Australian subsidiaries of foreign groups with global turnover exceeding AU$1 billion. Unless exempted, affected groups may have additional “risk identification” reporting obligations with the ATO, including obligations to file a country-by-country report, a master file and a local file.

Australian tax laws contain various anti-avoidance rules that may cancel tax benefits or alter the way the tax law applies to a particular taxpayer. Australian tax legislation also contains a number of specific anti-avoidance rules as well as general anti-avoidance law.

The federal government has introduced a Bill into Parliament which, if passed, may require certain large multinationals to publicly disclose selected tax information on a country-by-country basis. The information would be reported in a standardized format and would be centrally hosted to facilitate comparability across entities, jurisdictions, and reporting periods.

Multinational anti-avoidance law

There have been recent specific avoidance measures for global groups. These new measures include the Multinational Anti-Avoidance Law (MAAL), which aims to prevent multinationals using structured arrangements to avoid the consequence of a permanent establishment in Australia by making supplies to Australian customers with the involvement of an Australian entity that is associated with or commercially dependent upon the foreign supplier.

Diverted profits tax

Other measures include the diverted profits tax (DPT), which affects significant global entities by targeting arrangements that artificially divert profits overseas through related entities if the arrangements result in foreign tax of less than 80% of that which would otherwise have been paid in Australia. Where the DPT is invoked, the special levy is imposed on the diverted profits at a penalty rate of 40%.

Multilateral Instrument

Australia signed the Multilateral Instrument (MLI) on June 7, 2017 and deposited its instrument of ratification on September 26, 2018. On January 1, 2019 the MLI entered into force and began to apply to some of Australia’s tax treaties with immediate effect for withholding taxes and from July 1, 2019 with respect to other taxes. The extent to which the MLI will modify the operation of Australia’s tax treaties depends on the adoption positions taken by each treaty partner. Australia has listed 35 income tax treaties that will be modified by the MLI but, the date of effect of the MLI provisions for some jurisdictions remains conditional upon the treaty partner taking further steps to formally adopt the MLI. It is expected that the number of treaties modified by the MLI may change as more jurisdictions sign and ratify the MLI and nominate their treaty with Australia. Notable exclusions are Australia’s treaties with the United States (which has not adopted the MLI), Germany, Switzerland and Taiwan.

Australia has adopted the minimum provisions of the MLI and has also adopted certain optional provisions, including Article 8 (Dividend transfer transactions), Article 11 (Application of tax agreements to restrict a Party’s right to tax its own residents) and Article 15 (Definition of a person closely related to an enterprise). In addition, Australia has adopted a number of provisions subject to certain reservations, including Article 3 (Transparent entities), Article 4 (Dual resident entities), Article 9 (Capital gains from alienation of shares or interests of entities deriving their value principally from immovable property), Article 13 (Artificial avoidance of permanent establishment status through the specific activity exemptions), Article 14 (Splitting-up of contracts) and Articles 18-26 (Arbitration).

Thin capitalization

Australia’s thin capitalization rules are designed to prevent entities with cross-border operations from funding their operations with excessive levels of debt to procure a more favorable Australian tax result.

The thin capitalization rules apply to most multinational businesses operating in Australia with at least AU$2 million in debt deductions (calculated on an associate inclusive basis). Different tests apply for “general class entities” (which includes most multinational businesses) compared to banks and other financial entities. 

The rules for “general class entities” were substantially amended in April 2024 and now contain three tests: the default “fixed ratio test,” and two elective tests being the “group ratio test” and the “third party debt test”. The default test is the fixed ratio test, which disallows debt deductions to the extent that net debt deductions exceed 30% of “tax EBITDA.” The excess is disallowed but the denied amount may be carried forward for up to 15 years subject to an integrity rule, and subject to the company continuing to use the fixed ratio test.

The group ratio test (allows a group company to claim net debt deductions up to the level of the worldwide group’s net interest expense as a share of earnings) or third party debt test (allows all debt deductions that are attributable to genuine third party debt only) may be elected as alternatives to the fixed ratio test, but a taxpayer who chooses either of those tests cannot carry forward the amount of any disallowed debt deductions. Further, any carry forward disallowed amounts from prior years will be lost if the company switches from the fixed ratio test to either the group ratio test or the third party debt test.

International tax reform

Australia has enacted hybrid mismatch rules which broadly implement the OECD BEPS Action 2 recommendations with respect to neutralizing hybrid mismatches.

The federal government has also announced that it will implement a new global minimum tax and domestic minimum tax based on the OECD Global Anti-Base Erosion Model Rules. This proposal is part of a global initiative to limit tax competition by introducing a globally uniform floor.

The proposed measure targets the digital economy and comprises two components:

1. First, there will be a new minimum effective global tax rate of at least 15% for large multinational enterprises. Under this proposal, the:
   1. Income inclusion rule will apply to income years starting on or after January 1, 2024; and
   2. Undertaxed profits rule will apply to income years starting on or after January 1, 2025.
2. Secondly, there will be a 15% domestic minimum tax applying from January 1, 2024.

The global minimum tax and domestic minimum tax will be based on the OECD Global Anti-Base Erosion Model Rules.

The global minimum tax and domestic minimum tax will apply to large multinationals with annual global revenue of at least €750 million (approximately AU$1.2 billion).

Multinationals with Australian headquarters will be able to file the GloBE Information Return (to be developed at the OECD level) and pay any arising top-up tax liabilities payable in Australia to the Australian Taxation Office.

Withholding tax

The general rule that non-residents are liable for Australian tax on all Australian-source income is modified in relation to dividends, interest and royalties.

Payers are required to withhold tax from interest, dividends and royalties paid to non-residents. Trustees, agents or others who receive interest, dividends or royalties on behalf of a non-resident, where withholding tax has not been withheld by the payer, are also required to withhold tax. The tax rates of withholding tax vary, depending on whether a double tax treaty applies. The dividend, interest or royalty does not need to be actually paid to the non-resident to be subject to withholding tax. The liability can arise where the income is reinvested, accumulated, capitalized or otherwise dealt with on behalf of the non-resident.

Certain other payments to non-residents by a resident business are subject to withholding obligations. For example, foreign resident capital gains withholding (FRCGW) applies when a foreign vendor disposing of “taxable Australian property” (such as land mining tenements or shares in a land-rich company) at the rate of 12.5%. However, the Australian Government has announced that the FRCGW rate will increase to 15% from January 1, 2025.

However, the FRCGW is a non-final withholding and, upon filing a tax return with the ATO, the foreign vendor may be entitled to a credit to offset against the vendor’s CGT liability on the transaction.

Managed investment trusts

Certain distributions made by a managed investment trust (MIT) to its foreign investors are subject to a concessional tax rate of withholding tax.

The rate of withholding depends whether the investor’s address is in a jurisdiction with which Australia has an effective exchange of information (EIO) agreement: the UK, the US and New Zealand.

The concessional tax rate only applies to distributions from a MIT of Australian-source net income other than dividends, interest and royalties.

A special concessionary rate of 10% applies to fund payments by an eligible clean building MIT.

A new regime for attribution managed investments trusts (AMIT regime) applies from July 1, 2016. Generally, under the AMIT regime, qualifying MITs will (among other things) be treated as a fixed trust for income tax purposes and will be able to “flow through” taxable income to their unitholders on an “attribution” basis, and for that taxable income to retain its character for tax purposes as it flows through the trusts. This regime increases certainty and provides greater flexibility while reducing compliance costs for MITs.

Corporate collective investment vehicles

A new regime for corporate collective investment vehicles (CCIVs) has commenced from July 1, 2022. CCIV are corporate investment vehicles that provide flow‑through tax treatment.

The proposed CCIV regime adopts a corporate structure which is intended to be more recognizable for international investors than the trust structure for MITs. The CCIV will be established as a company limited by shares and will need to have a corporate director that holds an Australian financial services license authorizing it to operate a CCIV. The corporate director is similar to the role of a responsible entity for MITs. The legal structure involves a single legal entity with sub-funds as separate cells (without legal personality). Assets and liabilities of each sub-fund must be segregated from other sub-funds.

The tax framework for CCIVs will broadly align with the attribution tax regime for MITs. CCIVs will need to meet similar eligibility criteria as MITs. This includes being widely held and engaging primarily in passive investment activities. CCIVs are not intended to be trading vehicles. Investors in CCIVs will generally be taxed as if they had invested directly in the underlying assets.

Indirect taxes – GST

Goods and services tax overview

The principal indirect tax assessed and imposed by the federal government is the GST, which is levied on most supplies of goods and services by businesses at the rate of 10%.

The GST is a multi-stage tax payable by suppliers (similar to a value-added tax), where each stage in a supply chain is potentially taxable, but with registered entities being entitled to refunds of GST incurred on their business inputs, referred to as input tax credits. GST is not applied to most exports of goods and services. Businesses must register for GST if they make taxable supplies of more than AU$75,000 per year, regardless of whether the business in Australia is conducted through an Australian company or an Australian branch. The liability to pay GST is generally imposed on the supplier. Most registered entities are required to account for GST either monthly or quarterly.

GST – types of supplies

Some supplies are classified as GST-free. These include certain supplies relating to health, aged care, education and food, as well as sales of farm land and supplies of businesses as going concerns.

Other supplies may be exempt so that no GST liability arises, but the supplier may be denied input tax credits on business inputs relating to that supply. Exempt supplies may include certain financial supplies (such as loans, currency and derivative transactions and share transfers), residential rents and sales of established residential premises.

GST groups

Groups of related entities may be eligible to form a GST group and nominate a “representative member” to be responsible for recognizing the GST liabilities and input tax credits in respect of supplies and acquisitions to and from entities outside the GST group. The representative member is the entity primarily responsible for the group’s GST liability.

It is important to note, however, that the other members of the group can be held jointly and severally liable for the GST liability of the group should the representative member default in its payment obligations to the ATO. One way group companies may mitigate the risk of joint and several liabilities arising (which is particularly relevant for members exiting from the group) is for each group member to enter into a valid indirect tax-sharing agreement that allocates the GST liabilities of the group to each of its members. Where indirect tax-sharing arrangements are in place, in the event of a default by the group representative, an individual member’s liability may be limited to its allocation of GST provided under the agreement.

GST and cross border supplies

The Australian government introduced GST on all low value imported goods with a value under AU$1,000 on July 1, 2018. These GST changes also affected Australian GST-registered suppliers, including Australian retailers who “drop ship” (i.e., sell goods that are located overseas at the time of sale, and sent directly to consumers in Australia from an overseas source). Imported goods valued above AU$1,000, as well as tobacco products and alcoholic beverages continue to have GST applied. Overseas retailers that meet the registration threshold of AU$75,000 will need to register for GST, charge GST on sales of low value imported goods (unless they are GST-free supplies), and lodge returns with the ATO.

However, some foreign businesses that make supplies to Australian businesses may not need to register, or the GST obligations may shift to the Australian business recipient of their supplies.

Supplies by a non-resident with no physical presence in Australia may no longer be connected with Australia (and may therefore not be subject to GST) if:

1. It is a supply of intangibles (such as services and digital products) and the recipient is an Australian-based business, or a non-resident acquiring the intangibles for their overseas enterprise;
2. It is a transfer of ownership of leased goods located in Australia, where the transfer takes places between non-residents that do not have an enterprise in Australia; or
3. It is a supply of goods where the supplier installs or assembles the goods in Australia, but does not import the goods into Australia.

GST and Australian resident agents

Non-resident businesses that have Australian resident agents can agree that their resident agent is liable for GST on Australian supplies made through the resident agent. Notice of that arrangement should be given to any Australian-based business customer.

GST and reverse charged supplies

Generally, intangible supplies by non-residents to their Australian business customers will not be connected with Australia (and therefore are not subject to GST). However, the recipient of the supply may be liable to pay GST under “reverse charge” rules if the recipient is an Australian-based, GST-registered business and acquires the supply other than wholly for a “creditable purpose” (being for the purpose of its enterprise and not relating to the making of input tax supplies). This will often arise when a non-resident supplies intangibles to an Australian financial institution.

In other situations, Australian business customers of a foreign supplier may agree to a voluntary “reverse charge” of GST on supplies made to them.

Other indirect taxes

Customs and excise duties

In addition to the GST, which is imposed on taxable importations and supplies connected with Australia, there are also excise duties imposed on certain commodities and customs duties on imported goods.

Petroleum Resource Rent Tax

The federal government has announced that it proposes to introduce a cap on the use of deductions to offset assessable Petroleum Resource Rent Tax (PRRT) income of liquefied natural gas (LNG) producers under the PRRT. 

The cap will:

1. Bring forward PRRT receipts from LNG projects which are yet to pay PRRT and ensure a greater return to taxpayers from the offshore LNG industry; and
2. Limit deductible expenditure to the value of 90% of each taxpayer’s PRRT assessable receipts in respect of each project interest in the relevant income year and apply after mandatory transfers of exploration expenditure. 

Fringe benefits tax (FBT)

FBT is payable by employers on the value of certain benefits that have been provided to their employees or to associates of their employees. It typically applies to in-kind benefits and is payable at the top personal tax rate based on the taxable value of the benefit.

The FBT year is from April 1 to March 31. The FBT rate is currently 47%. FBT is calculated on the grossed-up value of fringe benefits (the calculation of which differs depending on the type of benefit and availability of input tax credits for GST).

Employers may claim a deduction for the payment of FBT. This results in the similar tax treatment of salary and wage income and fringe benefit remuneration provided to employees on the top marginal tax rate, except for certain concessionally taxed benefits.

There are a number of FBT exemptions and concessions, meaning benefits that are exempt from FBT. A concession is a reduction in the taxable value of a fringe benefit, which results in a reduced amount of fringe benefits tax payable (or in some cases, no FBT being payable at all). For example, concessions may be allowed for Remote Area Reductions, Transport Reductions and Relocation Reductions paid to employees. Some specific concessions also apply to some nonprofit organizations, such as public benevolent institutions, charitable institutions, health promotion charities and religious institutions.

Superannuation guarantee levy

All employers must make superannuation contributions for their employees. The minimum contribution is currently 11% (for the year ending June 30, 2024) and will increase annually by incremental increases of 0.5% over the following four years to 12% from July 1, 2025.

Superannuation contributions are tax-deductible to the employer making the contributions if they are made to a fund that complies with federal legislation and if they do not exceed a maximum threshold. Income derived by a complying fund, including the contributions it receives, is taxable at the rate of 15%.

In the 2023-2024 Federal Budget, the government proposed to increase the tax rate on superannuation balances over AU$3 million, with effect from July 1, 2025. The legislation for this proposed measure has been introduced in Parliament but the measures are not yet law. If enacted, from July 1, 2025 the tax rate will increase from 15% to 30% for earnings corresponding to the proportion of an individual’s total superannuation balance that is greater than AU$3 million. Earnings relating to assets below the AU$3 million threshold will continue to be taxed at 15%, or 0% if held in a retirement pension account.

Under the Superannuation Guarantee Charge scheme, a charge is imposed on all employers who fail to provide a prescribed minimum of superannuation for their employees, including certain foreign events, which can have significant tax implications.

State and local taxes

The main state taxes are:

1. Stamp duties, levied on certain transactions and documents
2. Land tax, levied on the unimproved value of land
3. Payroll tax, levied on the gross payroll of a business.

Local government taxes are comprised of rates, which are generally levied by reference to the value of land.

Stamp duty

Each state and territory imposes its own stamp duties (including transfer duty) and the rules are different in every state and territory. Transfer duty is a tax on transactions (including conveyances of real property and business assets). The rates and duties payable vary among the states and territories and depend on the nature of the transaction. Transfer duty is generally payable by the purchaser or transferee (although some jurisdictions may impose duty on all parties to the transactions).

An additional surcharge applies to certain acquisitions of residential land by foreign purchasers.

Land tax

Land tax is an annual tax levied on the owner of land in Australia, based on the unimproved capital value of the land, which excludes the value of the building or capital improvements.

An additional surcharge applies to certain holdings of residential land by foreign or absentee owners.

Payroll taxes

Each state and territory imposes payroll tax, under which a registered employer is liable to pay tax on the employer’s payroll. The tax is only payable where the employer’s payroll exceeds a minimum threshold. While the state and territory legislation has been largely harmonized to support business efficiency, the payroll tax rates and thresholds still vary by state or territory.

In some instances, payments to contractors may be considered wages and subject to payroll tax.