Income Tax In Australia Essay

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Introduction
Before July 1, 2016, every taxpayer in Australia who earned at least $80,000 had to pay a portion of it to the government for income tax. However, that program faced a few changes, and as from that date, the government stated that it would be taxing 37 percent of incomes from any taxpayer who earns at least $87,000 (ATO, 2017). In this discussion paper, an extensive review of the Australian Income Tax will be provided, with the sole focus on its application to real-life situations. Key focus is on income tax, which comprises of personal income tax, corporate tax, and capital gains
Applicable laws/rates
In Australia, the income tax is the country’s primary revenue stream and the basis of the Australian Taxation System. The government …show more content…

The net capital gains (after the application of concessions) are included in the taxable income of the taxpayer and taxed in line with the marginal rates. Although capital gains apply to companies, individuals and other entities with the legal right to own property, they are taxed differently. For example, Trusts pass on the liability of capital gains tax to their beneficiaries while partners pay it in line with their respective percentages of partnership. Following the ceasing of capital gains indexation that occurred in 1999, gains on assets possessed for over a year taxed after a discount of 50 percent for individuals, and 33 percent for superannuation funds (NAB 2017). Given the high rates of inflation, the government can levy capital gains tax even when there is no gain achieved in the purchasing power. However, in the cases where the base of an indexed cost applies (where the acquisition of the asset took place before indexation ceased) using the old rules of indexation gives an improved tax result. While those realized by companies do not feature a discount, the capital gains that are made by trusts are taxed in the same manner as those made by the ultimate beneficiary. The Australian taxation law also provides that disposing of assets that were held before September 20, 1985 (also referred to as pre-CGT assets) does not apply to capital gains tax (ATO

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