With the recent confirmation that Brisbane will host the 2032 Olympic Games, many industries will likely see growth over the coming decade as infrastructure projects ramp up. Despite some dips due to coronavirus restrictions, economic growth in Australia and has outpaced its 2019 position, with growth in real-estate prices, lower unemployment and financial institutions well placed with CET1 of 12%. Queensland

With such good prospects for business in the coming years ahead, we’re excited to be an active part of our clients’ success stories. This blog is part of an ongoing series on Doing Business in Queensland, helping our clients looking to enter or grow within the Queensland market with the best information and guidance available.

 

Federal Government Taxes

The main direct tax levied by the Federal Government is income tax. Income tax can include capital gains tax and is applied to companies, trusts and individuals. The Australian Taxation Office (ATO) is Australia’s federal taxation authority.

Indirect taxes include GST, customs and excise duties and fringe benefits tax. Excise is imposed on commodities such as alcohol, tobacco and petroleum. Fringe benefit taxes are levied on non-monetary benefits provided to employees.

GST

The Good and Services Tax (GST) is a broad-based consumption tax applied at the rate of 10%, and applies to the majority of goods and services consumed in Australia. The general exceptions include basic foods, education, health, charitable activities and some financial transactions.

GST is essentially a value-added tax and is generally applied at each stage of the production/distribution chain. Businesses may incur GST liability at either the issue of an invoice or receipt of any payment.

 

All businesses must register for GST if they have a turnover of AUD 75,000 or more in sales during the financial year. Businesses registered for the GST have to return a Business Activity Statement (BAS) at the end of each quarter reporting their business tax entitlements and obligations.

Such businesses can also claim a GST refund or ‘input tax credit’ for the GST component applying to goods and services paid for in the course of carrying on their business.

FRINGE BENEFITS TAX (FBT)

Businesses which provide non-cash benefits to their employees are generally subject to Fringe Benefits Tax (FBT). This is charged at 49% of the taxable value of the fringe benefit, and is deductible by the employer for income tax purposes.

FBT applies to benefits such as private use of a motor vehicle, waiver of a debt, interest-free or low-interest loans, free or cheap housing and some discounted goods or services.

 

10% Withholding Tax on Real Property Sales Over $2 million

Purchasers of Australian real property worth $2 million or more who enter contracts on or after 1 July 2016 will need to withhold 10% of the sales proceeds before final settlement unless either:

• The vendor provides them with an Australian Taxation Office clearance certificate that the vendor is an Australian tax resident; or
• The vendor provides them with a Tax Office variation certificate in which case the reduced withholding rate specified in the certificate applies.

 

Assets subject to the 10% withholding:

• Real property in Australia – land, buildings, residential and commercial property;
• Lease premiums paid for the grant of a lease over real property in Australia;
• Mining, quarrying or prospecting rights;
• Interests in Australian entities whose majority assets consist of the above such property or interests – this is called an indirect interest;
• Options or rights to acquire the above property or interest.

Vendors who are subject to the non-resident withholding tax will need to lodge an Australian income tax return for the year in which the property is sold. Any tax withheld will be available as a credit against the final Australian income tax or capital gains tax liability.

 

Customs and Excise

Customs duty is payable on certain goods at the time they enter Australia. The amount of duty payable is generally levied on the customs value of the goods which may differ from the sale price.

Excise is imposed on the local production of a number of goods including tobacco products, alcoholic beverages and petroleum.

 

State Taxes

Each State or Territory imposes a large number of taxes and is responsible for determining its own tax legislation, regulations, and rates. There can be distinct differences between these rates of tax. The primary taxes they impose include payroll tax, stamp duty and land taxes.

Whilst Queensland is used in the example below for indicative purposes, rates applicable for each state do differ and should be checked with each jurisdiction separately.

 

Payroll tax

Each State or Territory individually levies payroll tax on gross monthly wages, salaries and certain non-cash benefits paid by employers. As an example, the current payroll tax rates for Queensland are set out below:

 

TABLE 4: Payroll tax rates,  Queensland

annual wages (AUD)	Tax Rate %
AUD $0 – $1,300,000	Nil
$1,300,000 – $6,500,000	4.75%
Over $6,500,000	4.95%

Transfer Duty

Transfer Duties are imposed on contracts and legal documents such as transfers of land, goodwill, and the taking of security for financial accommodation such as mortgages and charges. Again, the rates vary according to the type of transaction, and between the different States and Territories.

As an indication of the rates of transfer duty, the following are the Queensland Transfer of land or business duty rates as at 1 July 2021.

 

TABLE 5: Transfer of land or business duty rates, Queensland

Transfer bands (AUD)	RateS at June 2016
0– $5,000	Nil
$5,000 – $75,000	$1.50 per $100 or part thereof above $5,000
$75,000 – $540,000	$1,050 + $3.50 per $100 or part thereof above $75,000
$540,000 – $1,000,000	$17,325 + $4.50 per $100 or part thereof above $540,000
Over $1,000,000	$38,025 + $5.75 per $100 or part thereof above $1,000,000

 

Additional duty of 7% applies to acquisitions of residential land by foreign persons or entities.

Land Tax

Land Tax is imposed by each State or Territory, is paid annually, and is based upon the unimproved value of land owned by the taxpayer. Generally, the rate of tax varies according to the value of the property. This tax may be deductible for income tax purposes if the land is used in the production of assessable income. There are various exemptions available to landholders depending upon the use of the land, including an exemption (in most cases) for an individual’s principal residence.

Other impositions

Annual fees are payable on all vehicle registrations, as are council rates and taxes which again vary according to State or Territory regulations.

Our firm provides a full suite of business advisory and accounting services that we tailor to meet the individual needs of each and every client. Whether you’re new to doing business in Queensland or you’re a seasoned veteran at it, our team of experts is committed to ensuring you are informed and positioned well for success in the Queensland market. Should you have any questions, concerns, or are thinking of conducting business in Queensland, we’re here to help.

 

Please direct questions or concerns to Lauren Steinheuer or Dean Vane.

 

Lauren Steinheuer: L.Steinheuer@uhyhnseq.com.au

Dean Vane: D.Vane@uhyhnseq.com.au