The Australian Federal Government becomes the sole collector of income tax in Australia as State Income Tax is abolished.
Income tax in Australia is imposed by the federal government on the taxable income of individuals and corporations. State governments have not imposed income taxes since World War II. On individuals, income tax is levied at progressive rates, and at one of two rates for corporations. The income of partnerships and trusts is not taxed directly, but is taxed on its distribution to the partners or beneficiaries. Income tax is the most important source of revenue for government within the Australian taxation system. Income tax is collected on behalf of the federal government by the Australian Taxation Office.
The two statutes under which income tax is calculated are the Income Tax Assessment Act 1936 and the Income Tax Assessment Act 1997; the former is gradually being re-written into the latter. Taxable income is the difference between assessable income and allowable deductions. There are three main types of assessable income for individual taxpayers: personal earnings (such as salary and wages), business income and capital gains. Taxable income of individuals is taxed at progressive rates from 0 to 45%, plus a Medicare levy of 2%, while income derived by companies is taxed at either 30% or 27.5% depending on annual turnover, but is subject to dividend imputation. Generally, capital gains are only subject to tax at the time the gain is realised and are reduced by 50% if the capital asset sold was held for more than one year.
In Australia the financial year runs from 1 July to 30 June of the following year.
The Australian Government, also known as the Commonwealth Government, is the national government of Australia, a federal parliamentary constitutional monarchy. Like other Westminster-style systems of government, the Australian Government is made up of three branches: the executive (the prime minister, the ministers, and government departments), the legislative (the Parliament of Australia), and the judicial.
The legislative branch, the federal Parliament, is made up of two chambers: the House of Representatives (lower house) and Senate (upper house). The House of Representatives has 151 members, each representing an individual electoral district of about 165,000 people. The Senate has 76 members: twelve from each of the six states and two each from Australia's internal territories, the Australian Capital Territory and Northern Territory. The Australian monarch, currently Queen Elizabeth II, is represented by the governor-general. The Australian Government in its executive capacity is formed by the party or coalition with a majority in the House of Representatives, with the prime minister being the parliamentary leader who has the support of a majority of members in the House of Representatives. The prime minister is formally appointed to the role by the governor-general.
The government is based in the nation's capital, Canberra, in the Australian Capital Territory. The head offices of all fourteen federal departments lie in Canberra, along with Parliament House and the High Court. The judicial branch of government, headed by the High Court of Australia, is independent of the legislative and executive branch, and ensures that government acts according to the constitution and law. As a founding member of the Commonwealth and a former British colony before Federation in 1901, Australia's Constitution is influenced heavily by the British Westminster system of government, as well as the United States Constitution.