Australian taxation system involves the payment of taxes in various forms since individuals and businesses in the country may be required to pay these charges to all governmental level sie. local, state, and federal governments. The main reason for collection of taxes in the Australian taxation system is that the collected taxes are used to cater for public services and facilitate redistribution of financial wealth. The most significant form of taxation is this system is income taxes that are collected by the country's federal government through the Australian Taxation Office. While the system acts as an important facet of the country's economy, it has attracted divergent views from various sectors in the society. On one hand, the system has attracted strong views with which it's considered as one of the best across the globe and is used to generate finances for public goods. On the other hand, the system has also attracted negative views since it's regarded as a political technique used by governments and other political parties to fulfill their agendas.
How Australia's Taxation System Works:
An understanding of the Australian taxation system is quite difficult because it's a very complicated system that has various facets. However, the tax-transfer system remains as an essential part of the country's economic and social infrastructure ("Australia's Future Tax System," 2008). The essence of the Australian tax-transfer system is evident in its long standing and ongoing contributions and influence on opportunities available to the nation's citizens. One of the most notable things about this system is that it had and will constantly be shaped by the choices of Australians regarding the kind of society they would like to live in. Taxation in Australia is basically carried out on individuals and companies or businesses through different forms ("Taxation," n.d.).
Since taxation in Australia is based on the tax-transfer system, it covers three governmental level sie. local, state, and federal governments. From a legal perspective, the system is made up of several different taxes and transfers that are developed and administered by these levels of governments. Taxation in Australia can be regarded as a single-economic system that affects a wide range of choices by individuals and businesses through the comprehensive and complex interactions between its components. Even though these different elements significantly impact the nation's economic decisions in the same manner, there are major differences between the taxes and transfers with regards to highlighting structural elements.
Currently, an Australian resident company or business is subject to a 30% tax rate of its taxable income, which is evaluated based on assessable income minus allowable deductions. On the contrary, a non-resident company or business in the country is taxed depending on its Australian source income similar to the resident company or business. For individuals, the Australian Taxation Office offers necessary guidelines and advice for those entering the system for the first time. Such advice and guidelines are provided to help these individuals to understand the Australian tax law. Generally, an Australian resident is primarily subject to Australian income tax on income and capital gains obtained from across the globe. However, an individual may be subject to different tax offsets, credits, treaty provisions, liabilities, and levies based on his/her unique circumstances ("Taxation in Australia," 2011).
The three most common taxes in the Australian taxation system are personal income tax, Goods and Services Tax, and Fringe Benefits Tax. Personal income tax is based on how much an individual earns and the ever-changing tax brackets established by the government while Goods and Services Tax is consumer and broad-based tax on goods on services for businesses (Reinhardt & Steel, 2006). On the contrary, the Fringe Benefits Tax is paid on specific benefits offered by employers to their employees, which implies that it's separate from income tax. The types of taxes in the Australian taxation system include capital gains tax, wholesale sales tax, retirement savings tax, company income tax, land taxes, payroll tax, and estate tax.
Views on Australian Taxation System:
As previously mentioned, the Australian taxation system has generated different views regarding the effectiveness of the process and its contributions towards the country's economic growth. For individuals and business in support of the tax-transfer method used in this system, Australia's taxation is considered one of the best across the globe since it functions efficiently in generating money for public goods. These individuals and businesses also argue that without the taxation system, the existence of Australia as a civilized society would be nearly impossible.
On the contrary, this system has attracted huge criticism to an extent that some people consider it as a political technique by governments and political parties to achieve political agendas. In this case, taxation in Australia is regarded as...
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