Income tax is levied on taxable income and is paid to the Commonwealth Government. Taxable income is calculated as assessable income less any allowable deductions. Deductions include such things as wages, the cost of stock, rent, bad debts, and previous year losses.
Sole traders are not required to complete a separate return for their business ?? they use their personal income tax return to report their business income and deductions. Partnerships complete a partnership tax return to show the partnership??s income and deductions, and how the profit or loss was shared among the partners. Companies complete a company tax return to calculate the income tax the company should pay.
Individual:
Income tax is calculated on taxable income, which is the person??s assessable income less any allowable deductions.
Residents
Tax Rates 2007-08:
| Taxable Income |
Tax on this income |
| $0 - $6,000 |
Nil |
| $6,001 - $30,00 |
15c for each $1 over $6,000 |
| $30,001 - $75,000 |
$3,600 plus 30c for each $1 over $30,00 |
| $75,000 - $150,000 |
$17,100 plus 40c for each $1 over $75,000 |
| Over $150,001 |
$47,100 plus 45c for each $1 over $150,000 |
Tax Rates 2008-09:
| Taxable Income |
Tax on this income |
| $0 - $6,000 |
Nil |
| $6,001 - $34,000 |
15c for each $1 over $6,000 |
| $34,001 - $80,000 |
$4,200 plus 30c for each $1 over $34,000 |
| $80,001 - $180,000 |
$18,000 plus 40c for each $1 over $80,000 |
| Over $180,001 |
$58,000 plus 45c for each $1 over $180,000 |
Non-Resident
Tax Rates 2007-08:
| Taxable Income |
Tax on this income |
| $0 - $30,000 |
29c for each $1 |
| $30,001 - $75,000 |
$8,700 plus 30c for each $1 over $30,000 |
| $75,001 - $150,001 |
$22,200 plus 40c for each $1 over $75,000 |
| Over $150,001 |
$52,200 plus 45c for each $1 over $150,000 |
Tax Rates 2008-09:
| Taxable Income |
Tax on this income |
| $0 - $34,000 |
29c for each $1 |
| $34,001 - $80,000 |
$9,860 plus 30c for each $1 over $34,000 |
| $80,001 - $180,000 |
$23,660 plus 40c for each $1 over $80,000 |
| Over $180,001 |
$63,660 plus 45c for each $1 over $180,000 |
Tax offsets reduce the tax payable. Tax offsets based on taxable income levels apply to:
Other tax offsets apply to those living in remote areas, people with dependants, and those who receive particular types of income or incur particular expenses
For more information about Sole Trader Income please acquire a Tax Pack from the ATO.
Partnership:
A partnership that is carrying on a business must show in a Partnership tax return all its income earned and deductions claimed for expenses in the course of carrying on business.
Each partner pays tax on their share of the partnership??s income, and thus must include their individual share of the net partnership profit or loss in their personal tax return.
Partnership and Trust 2005 Tax Return instructions are available at the ATO website.
Company:
A company is a distinct legal entity, with its own income tax liability, and must complete a Company Tax Return. A company??s income tax is calculated as a percentage of the taxable income the company earned during the financial year. The company tax rate is 30 percent.
The amount of tax to be paid is reduced by any PAYG instalments payable during the year.
Company 2005 Tax Return Instructions are available at the ATO website.
For further information on Income Tax see the Income tax for business essentials section of the ATO website.
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