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Income tax is levied on taxable income. Taxable income is calculated by using the following formula; 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.
Sole Trader:
Income tax is calculated on taxable income, which is the person’s assessable income less any allowable deductions.
Resident Tax Rates 2007-08:
| Taxable Income |
Tax on this income |
| $0 – $6,000 |
Nil |
| $6,001 – $30,000 |
15c for each $1 over $6000 |
| $30,001 - $75,000 |
$3,600 plus 30c for each $1 over $30,000 |
| $75,001 – $150,000 |
$17,100 plus 40c for each $1 over $75,000 |
| $150,001+ |
$47,100 plus 45c for each $1 over $150,000 |
Resident Tax Rates 2006-07:
| Taxable Income |
Tax on this income |
| $0 – $6,000 |
Nil |
| $6,001 – $25,000 |
30c for each $1 over $6000 |
| $25,001 - $75,000 |
$2,850 plus 30c for each $1 over $25,000 |
| $75,001 – $150,000 |
$17,850 plus 40c for each $1 over $75,000 |
| $150,001+ |
$47,850 plus 45c for each $1 over $150,000 |
Resident Tax Rates 2005-06:
| Taxable Income |
Tax on this income |
| $0 – $6,000 |
Nil |
| $6,001 – $21,600 |
15c for each $1 over $6000 |
| $21,601 - $63,000 |
$2,340 plus 30c for each $1 over $21,600 |
| $63,001 – $95,000 |
$14,760 plus 42c for each $1 over $63,000 |
| $95,001+ |
$28,200 plus 47c for each $1 over $95,000 |
Resident Tax Rates 2004-05:
| Taxable Income |
Tax on this income |
| $0 – $6,000 |
Nil |
| $6,001 – $21,600 |
17c for each $1 over $6000 |
| $21,601 - $58,000 |
$2,652 plus 30c for each $1 over $21,600 |
| $58,001 – $70,000 |
$13,572 plus 42c for each $1 over $58,000 |
| $70,001+ |
$18,612 plus 47c for each $1 over $70,000 |
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 $25,000 |
| $75,001 - $150,000 |
$22,200 plus 40c for each $1 over $75,000 |
| $150,001+ |
$52,200 plus 45c for each $1 over $150,000 |
Non-Resident Tax Rates 2006-07
| Taxable Income |
Tax on this income |
| $0 – $25,000 |
29c for each $1 |
| $25,001 – $75,000 |
$7,250 plus 30c for each $1 over $25,000 |
| $75,001 - $150,000 |
$22,250 plus 40c for each $1 over $75,000 |
| $150,001+ |
$52,250 plus 45c for each $1 over $150,000 |
Non-Resident Tax Rates 2005-06
| Taxable Income |
Tax on this income |
| $0 – $21,600 |
29c for each $1 |
| $21,601 – $63,000 |
$6,264 plus 30c for each $1 over $21, 600 |
| $63,001 - $95,000 |
$18,684 plus 42c for each $1 over $63,000 |
| $95,001+ |
$32,124 plus 47c for each $1 over $95,000 |
Non-Resident Tax Rates 2004-05
| Taxable Income |
Tax on this income |
| $0 – $21,600 |
29c for each $1 |
| $21,601 – $58,000 |
$6,264 plus 30c for each $1 over $21, 600 |
| $58,000 - $70,000 |
$17,184 plus 42c for each $1 over $58,000 |
| $70,001+ |
$22,224 plus 47c for each $1 over $70,000 |
For more information about Sole Trader Income Tax please see the Tax Pack information at the ATO website.
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.
Company 2005 Tax Return Instructions are available at the ATO website.
For further information see the ATO website.
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