This is never a straightforward issue and you should get the advice of a registered tax agent.

Capital gains tax accrues where an asset, acquired on or after September 20th 1985, is sold. In some circumstances the gain on the sale, i.e. the difference between the purchase and sale price, is subject to tax. It does not include a family residence used as a sole or principal dwelling. Capital gains tax assets include:

  • real estate;
  • shares in a company;
  • units in a unit trust or managed investment fund;
  • collectables e.g. jewellery;
  • personal use assets e.g. furniture.

CGT arises on the disposal of almost any asset in Australia. Although death itself is generally not a CGT event, the subsequent disposal of assets by beneficiaries will trigger CGT in many cases.

In other words, an asset inherited from a deceased estate is not treated as a disposal by the deceased, but as an acquisition by the beneficiary.

Therefore, CGT is not payable when the asset is transferred to the beneficiary, but if they subsequently sell the inherited asset at a profit, capital gains tax can apply.

Pay As You Go (P.A.Y.G)
People are affected by the PAYG system if they're in business or they pay provisional tax. The PAYG system began on 1st July 2000, and for most businesses it means one set of rules, one set of payment dates and one form to fill in.

PAYG allows businesses and investors to pay instalments based on their actual income after they've earned it, instead of paying based on their tax position for the previous income year.

Withholding rates are calculated on the assumption that, if your pay was the same throughout the year, you could be entitled to a small tax refund at the end of the financial year.

Fringe benefits tax
A fringe benefit is a benefit attached to a job that, although not paid in cash, is in effect worth a sum of money.

If you can answer "yes" to any of the following, you may be liable to pay fringe benefits tax:

  • Do you make cars or other vehicles owned by the business available to employees for private use including a car garaged at the employee's home?
  • Do you provide loans at reduced interest rates to employees?
  • Have you released an employee from an owed debt?
  • Have you paid for, or reimbursed, an expense incurred by an employee?
  • Do you provide a house or unit of accommodation to your employees?
  • Do you provide employees with living-away-from-home allowances?
  • Do you provide entertainment by the way of food, drink or recreation to your employees?
  • Are you a tax-exempt organisation that has provided food, drink or accommodation to employees?
  • Have you provided property, either free or at a discount, to employees?
  • Do any of your employees have a salary package arrangement in place?
  • Have you provided your employees with goods at a lower price than they are normally sold to the public?

These benefits, although they are not a component of the employees pay packet, are in fact subject to tax. The tax is payable by the employer. Of course the employee regards the benefit as part of their salary package.

FBT and salary sacrifice arrangements
A salary sacrifice arrangement (also commonly known to as "salary packaging" or "total remuneration packaging") means the employee agrees to forego part of their salary or wages in return for an employer providing benefits of a similar cost.

If the arrangement is effective the employee pays income tax on the reduced salary or wages and the employer may be liable to pay FBT on the fringe benefit.

Proper documentation is required that would include details of employees' remuneration including any salary sacrifice arrangement. – be careful about this, and make sure you get professional advice.

The sacrificed salary must be permanently forgone for the period of the arrangement.

Payroll tax
State governments apply this tax to wages that are paid by employers. Generally there are exemptions available for benevolent and similar groups.

Stamp duty
Most people only become aware of this tax when they purchase a property, however it is levied on many financial transactions.

For instance, it can be levied on transfers of shares, leases and mortgages.

GST
A GST rate of 10% is charged on most goods and services consumed in Australia. The GST applies to most businesses.

Businesses who are registered must include GST in the price they charge their customers for goods and services.

Businesses are able to claim a credit for the GST they have already paid on their business expenses and other inputs - these are called "GST credits".

GST free goods include:

  • medical and other health services, hospital services, residential or community care and medical aids;
  • child care services registered under the Childcare Rebate, eligible child care centres or other child care servicesreligious services;
  • non-commercial activities of charitable institutions;
  • water and sewerage goods and services;
  • education courses, course materials, student accommodation;
  • duty free goods bought by travelers.

Last Updated – April 2010