Question:
Corporate tax high, GST low
Answer:
Recent changes are outlined below:
July 1, 2022
- Loss carry back for eligible companies extended to cover 2023 income year.
- Professional firm profits diverted to the professional's spouse or other associates to be reviewed under new Tax Office guidance.
- Corporate collective investment vehicle legislative regime introduced.
- Temporary full expensing of depreciating assets extended to include 2023 income year.
- Depreciable assets of a company joining a tax consolidation group have tax costs setting rules modified for assets depreciated under temporary full expensing rules.
December 9, 2021
- Reduced Pandemic leave disaster payment of $750 per week made available through to 30 June 2022.
August 5, 2021
- COVID-19 Disaster Payments are non-assessable non-exempt income in 2021 income year and later. Payments phasing out as vaccination rates increase.
July 1, 2021
- New Investment Engagement Service launched for businesses planning significant new investments in Australia.
- Tax Office small business independent review service made permanent for businesses with turnover < $10m, for income tax, GST, exercise, luxury car tax, wine equalisation tax and fuel tax credits. Requested before amended assessment issued.
- Small business income tax offset for individuals increased to provide a reduction of 16% for a tax payable up to $1,000.
- Self-managed superannuation funds can now have six members, increased from four members previously.
July 1, 2021
- Some COVID -19 state and territory business grants received by small and medium enterprises are non-assessable, non-exempt income for 2021 and 2022 income years.
- Certain state, territory and local government financial support for individuals and businesses suffering COVID-19 impacts made exempt where businesses have turnover less than $50 million and only in eligible programs.
March 31, 2021
- JobKeeper payments scheme ended.
October 5, 2020
- Boosting apprenticeship commencements subsidy (up to 50% of apprentice's wages) is assessable income.
June 4, 2020
- Homebuilder grant for new home or substantial renovation construction is not subject to income tax.
April 1, 2020
- COVID-19 cash flow boost payments are not subject to income tax
Big accounting firm KPMG has released a world survey of corporate tax and indirect tax (in Australia the GST and in other countries often called a Value Added Tax or VAT) rates from around the world indicating that our 30% company tax rate is high and our 10% GST rate is low.
According to the Corporate and Indirect Tax Survey 2011, the Global Average Corporate Tax Rate for 2011 was 22.96%. World corporate taxes have declined steadily since the year 2000 where the average was 29.03%. An overall decline of about 6%. Of course, Australia’s current 30% company tax rate is above the average from year 2000. Interestingly, at that stage, our corporate tax rate was 36%!
The Global Average Indirect Tax Rate for 2011 was 15.41% and that average has not changed significantly for the period that KPMG has been recording the survey item since 2005. At 10%, our GST is nearly 5 ½% below the world average.
If living in Bulgaria is appealing to you, you can look forward to a low corporate tax rate of 10%. Alternatively, Ireland’s corporate tax rate is 12.5%.
On the higher end of the scale, the UK companies pay 26% company tax, German companies pay 29.37% and French companies pay 33.33%.
Given the Global Financial Crisis, we suspect this trend towards decreasing corporate tax rates may slow down over the next few years, as Governments endeavour to find further tax revenues.
