Tax

Tax law controls how governments, both at the State and Federal level, collect taxes. Taxes are levied on both individuals and businesses. Taxes in Australia are levied on the income you earn and the goods and services you buy or sell. The majority of tax paid in Australia is income tax, which is charged on income you receive, such as salary and wages, investment income and business income. Income tax in Australia is a marginal or progressive tax, which means the more income you earn, the higher rate of tax you pay. This tries to ensures that all Australians pay a fair share of tax on their income no matter how much they earn. 

Other common forms of tax pain in Australia include:

- Capital Gains Tax (CGT) which must be paid when you sell a capital asset such as a house or car;

- Stamp Duty, which is a state tax, usually paid on the transfer of real property;

- Goods and Services Tax (GST) which is paid as part of every transaction when you purchase goods or services. 

In Australia, tax is paid according to the financial year. A financial year is different from a calendar year, and lasts from July 1 to June 30 the following calendar year. At the end of the financial year most people need to lodge an annual tax return. In order to pay income taxes, you will need to get a tax file number (TFN) so that the Australian Tax Office (ATO) can identify you. 

Australia has a self-assessment tax system, which means that rather than seeking information from people, the ATO receives information from you voluntarily which is presumed to be correct. The ATO then uses random automatic checks to verify some information and may later examine your return more thoroughly if there are any anomalies. Because the onus is placed on the individual to provide true and correct information to the ATO, penalties exist for provision of false information. Because of this it is of great importance to ensure you understand your tax liabilities and seek legal advice if you need assistance.