Australia Taxation – Advanced cheat sheet

Company tax rate: 25% for base rate entities (aggregated turnover under $50m and no more than 80% passive income); 30% for all other companies for 2024-25 and later income years.

Companies are separate taxpayers: a company lodges its own return, pays tax on its own taxable income, and franking credits attach to dividends it pays; losses are carried forward subject to the continuity of ownership test or the similar business test.

Franking: maximum franking credit = dividend x 30/70 for a 30% company, or dividend x 25/75 for a 25% company; franking account is a running record and franking deficit tax applies if credits are over-allocated at year end.

Imputation: resident shareholders gross up dividends by franking credits and receive a refundable offset; non-residents generally receive no refund, and franked distributions to non-residents may be exempt from dividend withholding tax.

Small business entities (aggregated turnover under $10m) may access simplified depreciation: immediate deduction for assets costing less than $20,000 (per-asset threshold, subject to law at time of acquisition) and a general small business pool at 15% first year, 30% thereafter.

Division 7A: loans, payments, and debt forgiveness by a private company to shareholders or associates are treated as unfranked dividends unless minimum yearly repayments are made under a complying loan agreement at the benchmark interest rate within the lodgment day.

Sole trader vs company: a sole trader is taxed at individual marginal rates with no separate entity; a company pays the corporate rate but profits distributed as dividends are taxed again unless franking credits offset the shareholder-level tax.

Trust/company loss rules: companies cannot stream losses; the business continuity test (similar business test) applies to losses incurred from 1 July 2015, allowing carry-forward where the same or a similar business continues.

Consolidation: wholly owned eligible groups may form a tax-consolidated group; the head company is the single taxpayer, intragroup transactions are disregarded, and the joining entity's assets enter at their tax cost setting amount.

Trusts are not separate taxpayers; net income is taxed to beneficiaries presently entitled, or to the trustee under section 99A (45%) or section 99 (individual rates) where no beneficiary is presently entitled.

Present entitlement requires a vested, indefeasible interest in income or capital; a beneficiary who is presently entitled but under a legal disability is taxed at individual rates with the trustee liable to pay.

Streaming: a trust can stream capital gains and franked dividends to specific beneficiaries only if the trust deed permits and the trustee records the streaming decision in writing before the end of the income year (subdivisions 115-C and 207-B).

Partnerships are flow-through: each partner includes their share of partnership net income in their own return; the partnership files an information return and does not pay tax itself.

Partnership loss allocation follows the partnership agreement, or absent agreement, the partners' interests in the partnership; losses are quarantined to the partner and are subject to the non-commercial loss rules for individuals.

Trust losses: carry-forward trust losses can only be deducted against future trust income if the trust passes the 50% continuity of trust loss test or the pattern of distributions test, or qualifies under the family trust election rules.

Family trust election: a trust can make an FTE to access trust loss deductions and franking credit refunds, but distributions outside the family group attract family trust distribution tax at 46.5%.

Deceased estates: income of a deceased estate is generally taxed to the estate at individual rates for the period of administration, with special rules for testamentary trusts and minors.

Fixed trusts and MITs: a managed investment trust must meet the eligible investment business rules and is subject to specific withholding rates for foreign residents (generally 15% for fund payments).

Residence: an individual is an Australian resident if they reside in Australia, or meet the 183-day test, or the Commonwealth superannuation test; a company is resident if incorporated in Australia or centrally managed and controlled here.

Source: Australian-source income of non-residents is taxed on a net basis where a permanent establishment exists and on a gross withholding basis otherwise; withholding rates are 30% for unfranked dividends (reduced by treaty), 10% for interest, and 30% for royalties before treaty relief.

Foreign residents are generally not liable for CGT on non-taxable Australian property; taxable Australian property includes real property, assets used in a PE, and shares in land-rich entities.

Controlled foreign companies (CFC): attributable income of a CFC may be included in the Australian controller's assessable income unless an active income test or specific exemption applies.

Transferor trust rules and foreign investment funds rules may attribute income or gains to Australian residents holding interests in non-resident trusts or funds.

Transfer pricing: arm's length principle applies under Division 815; taxpayers must set cross-border related-party dealings at arm's length, and documentation (master file, local file, CbC report) may be required for significant businesses.

Thin capitalisation: debt deductions may be limited where the entity's debt-to-equity ratio exceeds the safe harbour (generally 60% of adjusted average debt for general entities) unless the arm's length or worldwide gearing tests are satisfied.

DTA relief: Australia's tax treaties allocate taxing rights, provide tie-breaker rules for dual residence, and reduce withholding rates; the Multilateral Instrument modifies many treaties to counter base erosion.

Foreign tax credit: a resident can claim a foreign income tax offset for foreign tax paid, capped at the Australian tax payable on that foreign income; excess credits may be carried forward for certain amounts.

Resident marginal rates for 2024-25: 0% up to $18,200; 16% from $18,201 to $45,000; 30% from $45,001 to $135,000; 37% from $135,001 to $190,000; 45% above $190,000, plus 2% Medicare levy.

Low income tax offset: up to $700, phasing out between $37,500 and $66,667; the seniors and pensioners tax offset and the private health insurance rebate also apply subject to income tests.

Superannuation contributions: concessional contributions are taxed at 15% in the fund (30% for high-income earners), capped at $30,000 for 2024-25; non-concessional cap is $120,000, with a bring-forward rule of up to three years.

Division 293 tax: an additional 15% tax applies to concessional contributions of individuals whose income plus contributions exceeds $250,000.

Superannuation earnings: fund earnings are taxed at 15% during accumulation and are exempt in retirement phase, subject to the transfer balance cap ($1.9 million for 2024-25) and the 15% tax on earnings supporting excess balances.

Minimum pension standards: account-based pensions require minimum annual drawdowns starting at 4% for ages under 65, rising with age; failure to draw affects the fund's tax exemption.

Preservation: superannuation benefits are preserved until retirement, age 65, or a condition of release; early access is limited to specific circumstances such as terminal illness or severe financial hardship.

Non-concessional and spouse contributions: spouse contribution tax offset of up to $540 applies where contributions are made for a low-income spouse; the government co-contribution applies to eligible low-income earners.

Foreign residents: individuals are taxed on worldwide income while resident; temporary residents may have foreign-source income and certain capital gains disregarded.

CGT events: the main event is A1 (disposal of a CGT asset); other events include E1-E9 (trusts), J1 (non-arm's length dealings), K events (leases), and F events (depreciating assets).

CGT assets include all assets except those specifically excluded (for example, trading stock, depreciating assets, and certain personal-use assets); the CGT discount is 50% for individuals and trusts, 33 1/3% for complying superannuation funds.

Cost base: five elements include acquisition cost, incidental costs, non-capital costs of ownership, capital costs to increase or preserve value, and costs to establish title; the reduced cost base is used for losses.

Time of acquisition and disposal: the contract date generally determines the CGT event for real property; for shares, the trade date applies.

Main residence exemption: a dwelling used as the main residence is generally exempt, with a partial exemption where the dwelling was used to produce income or was not occupied; the six-year absence rule applies.

Small business CGT concessions: the 15-year exemption, 50% active asset reduction, retirement exemption, and rollover are available to small business entities (aggregated turnover under $2m, or under $6m for the net asset value test) subject to the maximum net asset value test.

Capital losses are offset only against capital gains, not against ordinary income; they are carried forward indefinitely and applied before the CGT discount.

CGT and foreign residents: since 12 December 2019, main residence exemptions are generally denied to foreign residents, subject to limited exceptions; taxable Australian property rules determine liability.

Deceased estates: assets acquired by the executor or beneficiary may receive a cost base uplift to market value at date of death for assets acquired before 20 September 1985, subject to specific rules.

GST rate is 10% on taxable supplies and taxable importations; GST-registered entities claim input tax credits for creditable acquisitions used in carrying on an enterprise.

Registration is required where turnover equals or exceeds $75,000 ($150,000 for non-profit entities); taxi and ride-sourcing drivers must register regardless of turnover.

GST-free supplies include basic food, health and medical services, education, and exports; input-taxed supplies include financial supplies and residential rent, and do not attract input tax credits.

GST groups: entities under common control may form a GST group, with one member accounting for GST on behalf of the group; GST joint ventures allow a joint venture operator to account for GST.

Margin scheme: GST on the supply of real property or an interest in it can be calculated on the margin (consideration less acquisition cost) rather than the full consideration, subject to eligibility.

Going concern: a supply of a going concern is GST-free if the supplier and recipient agree in writing that the supply is of a going concern and the recipient is registered for GST.

Adjustments: annual and adjustment events require increasing or decreasing adjustments to correct input tax credit claims; the four-year adjustment period generally applies.

Other indirect taxes: fringe benefits tax applies to benefits provided to employees (rate 47% for 2024-25), and luxury car tax applies to cars above the LCT threshold; both are separate from GST.

Tax invoices: a tax invoice is required for input tax credits over $82.50 (GST-inclusive); recipients must hold a valid tax invoice at the time of lodging the return.

Self-assessment: taxpayers are required to lodge returns and are generally bound by their self-assessment; the ATO may amend assessments within the amendment period (two years for individuals, four years for other entities, subject to exceptions).

Rulings: public rulings bind the Commissioner; private rulings bind the Commissioner in relation to the taxpayer who applied, provided the arrangement is accurately described and carried out.

Objection: a taxpayer may object to an assessment or decision within the time limits (generally two years for private rulings and four years for assessments), and the objection must be in writing and set out the grounds.

Review: after an objection decision, the taxpayer may apply to the Administrative Review Tribunal (formerly the AAT) or appeal to the Federal Court; the Tribunal can review the merits of the decision.

Penalties: administrative penalties apply for failure to lodge, false or misleading statements, and schemes; base penalty amounts are reduced for voluntary disclosure and increased for repeat behaviour.

General interest charge: GIC accrues on late payment of tax and is tax deductible; shortfall interest charge applies to amended assessments and is also deductible.

Record keeping: taxpayers must keep records for five years after the relevant CGT event or the lodgment of the return, whichever is later.

Taxpayer's charter and ATO powers: the ATO has access and information-gathering powers, can issue garnishee notices, and can commence recovery action; taxpayers have rights to representation and review.

Reportable tax positions and disclosure: large businesses may be required to disclose uncertain tax positions; the ATO also operates a voluntary disclosure program for historical tax issues.

Part IVA: a scheme entered into with the dominant purpose of obtaining a tax benefit may be struck down; the Commissioner considers the eight factors in section 177D, including the manner of the scheme, its form, and its tax effect.

Tax benefit: a tax benefit includes an amount not included in assessable income, a deduction allowed, or a capital loss incurred; the Commissioner may cancel the benefit and impose penalties.

GAAR interaction: Part IVA applies to schemes across all taxes, including GST and FBT; specific anti-avoidance provisions (for example, Division 7A, thin capitalisation, and CFC rules) operate alongside it.

Ethics: tax advisers must comply with the Tax Agent Services Act 2009 (Code of Professional Conduct) and the Tax Practitioners Board's requirements; advisers must act honestly and with integrity and maintain confidentiality.

Conflicts of interest: advisers must identify and manage conflicts, avoid recommending aggressive positions without disclosure, and ensure advice is independent and documented.

Promoter penalties: promoters of tax exploitation schemes may face civil penalties and injunctions; advisers who implement schemes may be subject to sanctions.

Reasonable care: taxpayers and advisers must take reasonable care in preparing returns; failing to do so may attract penalties, and advisers may be liable for their own conduct.

Documentation: contemporaneous records and advice support positions taken; the ATO's compliance approach focuses on economic substance and commercial rationale.

Voluntary disclosure and cooperation: voluntary disclosure before audit can reduce penalties and is an ethical response to identified errors; concealment increases exposure.