Question

Outline the requirements of the Australian Tax Office, in regards to Goods and Services Tax,
Company Tax, Pay As You Go. Provide an outline of the what the tax is and how it works. [120-180
words]

Note: it is recommended that you use the Australian Government business.gov.au website or the
Australian Taxation Office website for your research
a) Goods and Services Tax
b) Company Tax
c) Pay as You go withholding

Answer 1

Goods and service tax:

It is a broad based tax of 10% on most of the goods, Services and other items, sold or consumed in Australia. It is a tax levied for the value addition in the chain. Every business or enterprise, whose turnover is $75000 or More are mandatorily required to register themselves under the GST and are required to charge GST on their goods and services.

Further the benefit of GST credit is also given to such enterprises wherein they can set off the GST paid by them for the purchase of raw material or input services for the further provision of final services to the customers and submit the net amount of GST collected from customer less of GST already paid by them to the government.

Company Tax:

Company Tax is the Tax Charged by Government of Australia on the income earned by the Company in Australia. In case of the resident company, the tax is charged on the income of company at the rate set up by the Australian government, and in case of non-resident company the tax is charged on the income of company from Australian source at the same rate as a resident company.

Currently, Full company tax rate is 30% and lower company tax rate is 27.5% and the entitly is eligible for the lower company tax rate, only if it is a base rate entity.
a base rate entity is a entity that fulfill both:

· has an aggregated turnover less than $50 million from 2018–2019 ($25 million for 2017 –2018

· 80% or less of your assessable income is base rate entity passive income (for example interest, dividends or rent)

Pay as you go withholding:

As per Australian Tax offices, it is an obligation of a business to withhold tax if it has employees, other workers(including contractors) or payments are made to the businesses that do not quote their Australian business number.

In this system, the Income tax is withheld from the income of employees, contractor’s salary or wages etc. or other payments. Therefore the payer of the income directly pays the tax to the government rather than the recipient of the income. And these payments are based in the expected level of income in the year.

Therefore it helps to meet the unexpected large tax bill at the end of the year. also based on the final assessment of the income, if the tax withheld is more than the tax payable, then difference becomes receivable to the assesse, on the other hand if tax withheld is less than the tax payable, then the difference is payable by the assesse.