Introduction to state and territory based taxes and duties and to Local Government imposts

Transcription

1 STATE TAXATION Introduction to state and territory based taxes and duties and to Local Government imposts General information... [ ] Stamp duty... [ ] Payroll tax... [ ] Land tax... [ ] 1 Update: 0

2 STATE TAXATION [ ] INTRODUCTION TO STATE AND TERRITORY BASED TAXES AND DUTIES AND TO LOCAL GOVERNMENT IMPOSTS [ ] General information This chapter explores the various taxes, duties and other imposts required or levied by state and territory and local governments and, what concessions are available, if any, which organisations can access the concessions and how to apply for them. This part provides a brief introduction to the types of taxes and duties covered. The remainder of the chapter is then broken down into each state and territory. Taxes and duties that may be levied by state and territory governments include: stamp duty (also called duty ); payroll tax; and land tax (which may also require an emergency services levy and/or a particular tax relating land improvement). These taxes are administered by the revenue office for each state and territory as follows: Australian Capital Territory ACT Revenue Office; New South Wales Office of State Revenue NSW Northern Territory Territory Revenue Office South Australia Revenue SA Queensland Office of State Revenue Tasmania State Revenue Office Victoria State Revenue Office Victoria Western Australia Office of State Revenue In addition, many Local Governments also impose rates and other fees in connection with the services and facilities each provide. For example, council rates, water rates and services charges. The below tax and duty summaries have been taken from the Australian Taxation Office (ATO) publication entitled Tax Basics for non-profit organisations (NAT 7966) (Canberra, June 2011). [ ] Stamp duty Stamp duty is a tax on: written documents (often referred to as instruments ) for example motor vehicle registrations and transfers, insurance policies, leases, mortgages, hire purchase agreements and transfers of property; and certain transactions for example, sale of businesses, real estate and certain shares. The rate of stamp duty varies according to the type and value of the transaction involved. Depending on the nature of the transaction, certain concessions and exemptions may be available in each state as: the Australian Capital Territory (ACT) does not levy duty on mortgages, hiring duty, leases and marketable securities; New South Wales (NSW) does not levy duty on leases, home loans to natural persons and the hire of goods; the Northern Territory does not levy stamp duty on mortgages, marketable securities and the grant and renewal of a lease; Queensland does not levy duty on leases, marketable securities, credit card and credit business transactions, and the hire of goods; South Australia does not levy stamp duty on mortgages, leases, listed securities and the hire of goods; Tasmania does not levy duty on unlisted securities, leases and the hire of goods; Victoria does not levy duty on unlisted securities, certain leases and mortgages; and Western Australia does not levy duty on marketable securities and leases. 2 Not-For-Profit Best Practice Manual

3 [ ] INTRODUCTION TO STATE AND TERRITORY BASED TAXES AND DUTIES AND TO LOCAL GOVERNMENT IMPOSTS [ ] Payroll tax Payroll tax is a tax on the wages paid by employers. Employers are liable for payroll tax when their total Australian wages exceed a certain level called the exemption threshold. Exemption thresholds vary between states and territories. Payroll tax should not be confused with the pay as you go (PAYG) withholding system. Payroll tax is payable to the relevant state or territory by an employer based on the total wages paid to all employees. Wages include salary, allowances, superannuation contributions, fringe benefits, shares and options and certain contractor payments. Certain organisations may be exempt from payroll tax provided that specific conditions are satisfied. [ ] Land tax Land tax is imposed in all states and the ACT but not in the Northern Territory. It is a tax generally levied on landowners. Landowners are generally liable for land tax when the unimproved value of taxable land exceeds certain thresholds except in the ACT. In some states there are deductions and rebates available, depending on the use of the land. Principal places of residence are usually exempt from land tax, although this is subject to certain qualifying criteria which vary between jurisdictions. Land owned and used by certain organisations may be exempt from land tax, such as non-profit societies, clubs and associations, religious institutions, public benevolent institutions and charitable institutions. 3 [The next text page is 1] Update: 0

4 STATE TAXATION 4 Not-For-Profit Best Practice Manual

5 WESTERN AUSTRALIA Tax and duties concessions for charities and not-for-profit organisations Western Australia At a glance... [ ] What is payroll tax?... [ ] What is metropolitan region improvement tax... [ ] Land tax... [ ] 1 Update: 0

6 TAX AND DUTIES CONCESSIONS FOR CHARITIES AND NOT-FOR-PROFIT ORGANISATIONS WESTERN AUSTRALIA [ ] At a glance WESTERN AUSTRALIA [ ] [See over page for table] 2 Not-For-Profit Best Practice Manual

7 TAX AND DUTIES CONCESSIONS FOR CHARITIES AND NOT-FOR-PROFIT ORGANISATIONS [ ] WESTERN AUSTRALIA 3 Update: 0

8 WESTERN AUSTRALIA [ ] 4 Not-For-Profit Best Practice Manual

9 TAX AND DUTIES CONCESSIONS FOR CHARITIES AND NOT-FOR-PROFIT ORGANISATIONS [ ] WESTERN AUSTRALIA 5 Update: 0

10 WESTERN AUSTRALIA [ ] 6 Not-For-Profit Best Practice Manual

11 TAX AND DUTIES CONCESSIONS FOR CHARITIES AND NOT-FOR-PROFIT ORGANISATIONS [ ] WESTERN AUSTRALIA 7 Update: 0

12 WESTERN AUSTRALIA [ ] [ ] What is payroll tax? Payroll tax is a 5.5% tax 1 payable by employers on all Western Australian wages paid to employees 2 and is generally required to be paid monthly. 3 An entity is obligated to apply for registration under the Pay-roll Tax Assessment Act 2002 (WA) (PTAA) where it would exceed certain threshold amounts. 4 Payroll tax is separate and distinct from the income tax withheld from an employee s wages. 1 See ss 5 and 8 of the Land Tax Assessment Act 2002 (WA) (LTAA) and s 5(2) of the Pay-roll Tax Act 2002 (WA) (PTA). 2 See s 5 of the LTAA. 3 See s 26 of the LTAA. Note that there are provisions which may allow entities to lodge and pay pay-roll tax at alternative intervals (s 29). 4 See s 24 of the LTAA. [ ] What is metropolitan region improvement tax Metropolitan Region Improvement Tax (MRIT) is generally payable each financial year on all land located in the metropolitan region in Western Australia. 1 The person who is the owner of the land at midnight at the end of the previous financial year is liable to pay the MRIT. 2 MRIT is calculated on the aggregate taxable value of all land owned by an entity at the rates specified in the Metropolitan Region Improvement Tax Act 1959 (WA) (MRITA). 3 1 See s 200(1) of the Planning and Development Act 2005 (WA) (PDA). The metropolitan region includes the City of Cockburn, City of Fremantle, City of Melville, City of Rockingham, Town of East Fremantle, Town of Kwinana, City of Nedlands, City of Subiaco, Town of Cambridge, Town of Claremont, Town of Cottesloe, Town of Mosman Park, Shire of Peppermint Grove, City of Stirling, City of Wanneroo, Town of Vincent, City of Joondalup, City of Armadale, City of Canning, City of Gosnells, City of South Perth, Town of Victoria Park, Shire of Serpentine-Jarrahdale, City of Bayswater, Town of Bassendean, City of Belmont, Shire of Kalamunda, Shire of Mundaring and City of Swan (Sch 5 of the PDA). 2 See s 200(1) of the PDA. 3 See s 200(2) of the PDA and s 10 of the MRITA. [ ] Land tax Relevant law Land tax in Western Australia is governed by the Land Tax Act 2002 (WA) (LTA), the Land Tax Assessment Act 2002 (WA) (LTAA) and the Taxation Administration Act 2003 (WA) (TAA) (together the Acts). The Acts are required to be read together as though they were a single Act. 1 What is land tax, when is it payable and who pays it? In simple terms, land tax is a tax imposed upon most owners of land calculated using a specific formula. The tax payable is based on the value of all land owned by an entity, including individual persons and is determined in accordance with the rates specified in the LTA. 2 Land tax is, subject to a number of exceptions, payable each financial year on all land in Western Australia. 3 Primary liability for land tax falls on the person who is the owner of the land at midnight at the end of the previous financial year. For example, an entity owning land on 30 June 2011 must pay land tax for the 2012 financial year. 4 Where owners hold land jointly, all owners are jointly and severally liable for land tax. 5 Agents and trustees of taxable land are liable for land tax but are entitled to recover the amounts paid from the principal or beneficiaries. 6 Exemptions and concessions A public charitable or benevolent institution or a non-profit association (NPA) may be entitled to an exemption or concession from land tax. 7 Additionally, provisions which may provide relief from land tax to NPAs, charities and benevolent institutions include exemptions relating to residences held on trust for disabled persons, land owned by religious bodies and educational institutions, land used for public or 8 Not-For-Profit Best Practice Manual

13 TAX AND DUTIES CONCESSIONS FOR CHARITIES AND NOT-FOR-PROFIT ORGANISATIONS [ ] WESTERN AUSTRALIA In order to obtain an exemption from the requirement to pay land tax, the land must be owned by, vested in or held on trust for a public charitable or benevolent institution and used solely for the purposes for which the institution was established. 10 Where the land is held by a public charitable or benevolent institution and not used solely for the purposes for which the institution was established, an exemption will apply to the proportion of the land which is being used solely for the purposes for which the institution was established. 11 In order to obtain an exemption or concession under s 38 of the LTAA: the land must be owned by, vested in or held on trust for a sports association or any other NPA; the land must be used as a site for providing facilities that are necessary for or conductive to the attainment of the objectives of the association; and for non-sporting NPAs, the facilities must only be available to members and their guests. Land held by a NPA but not used solely for a non-profit purpose may be eligible for a 50% concession on land tax provided that the non-profit usage is 50% or greater. 12 Commissioner s Practices LT 12.0 and LT indicate that the Commissioner considers that in order for an entity to be eligible for an exemption or concession under ss 37 or 38: income generated must be used solely for association purposes; and assets may not be distributed to members on winding-up. What is a charitable or benevolent institution? Public charitable or benevolent institutions are not defined by the Acts. However, the Commissioner s Practice LT 12.0 indicates that the terms include: public charitable bodies providing for the relief of poverty, the needs of older people, sickness or distress, the advancement of religions, education or other purposes beneficial to the community; and public benevolent institutions providing for the direct relief of poverty, sickness, suffering, distress, misfortune, disability or helplessness. What is a non-profit association? For the purposes of s 38 of the LTAA, a non-profit association (NPA) is defined in the glossary to the LTAA as a society, club or association that is not carried on for the purpose of profit or gain to its individual members. 1 See s 3 of the LTA and s 3 of the LTAA. 2 See ss 10 and 11 of the LTAA. Section 5 of the LTA specifies the tax rates applicable for each of the financial years ended 30 June at progressive rates based on the aggregate value of the land. 3 See s 5 of the LTAA. 4 Note however that there are certain provisions under s 8 of the LTAA which deem particular entities to be the owner at 30 June. See ss 7 and 8 of the LTAA. 5 See s 7(4) and (5) of the LTAA. 6 See s 9 of the LTAA. 7 See ss 37 and 38 of the LTAA. 8 See ss 26, 32, 33, 34, 36, 38A and 39 of the LTAA. 9 A v Commissioner of State Revenue [2007] WASAT 48, [19] [23]. 10 See s 37 of the LTAA. 11 See s 18 of the LTAA. 12 See s 38(3) of the LTAA. 13 See Department of Finance and Office of State Revenue website at [The next text page is 11] 9 Update: 0

14 WESTERN AUSTRALIA 10 Not-For-Profit Best Practice Manual