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Companies carry the tax can

RECENTLY released statistics from the Australian Tax Office show that companies account for only 5 per cent of the total number of taxpayers, but more than three-quarters of total income. In comparison individuals account for 85 per cent of taxpayers, but only 20 per cent of income.

About 11.9 million taxpayers lodged returns in 1999-2000, with over three-quarters of them using tax agents.

More than half of all the companies who lodged returns for the 2000 year identified themselves as being in the finance, insurance, real estate and business services industry. Of those, 85 per cent were private companies.

All but 2 per cent of Australian companies are small businesses. These are described by the ATO as businesses with total income less than $10 million.

Regardless of the size of companies, the tax office says most company income results from the sale of goods and services, and almost half of their expenses relate to the cost of sales.

The ATO statistics show that, as the size of a company grows, so does the proportion of income that it earns from interest and dividends.

While companies account for 5 per cent of taxpayers, partnerships and trusts both accounted for around 4 per cent, but they earned a lot less income.

Partnerships are used most in the primary production industry. WA and Queensland had the largest proportion of mining partnerships in 2000. Trusts are used most in the property industry.

The impact of the new tax system was highlighted in the latest release of the ATO’s tax statistics. It advised that, by June 30 2001, more than 3.5 million entities had registered for an ABN, and the ATO had collected $23.8 billion net GST. The wholesale industry accounted for a quarter of these GST collections, and it was followed by the property and business industry.

Like the GST, Wine Equalisation Tax also commenced on July 1 2000. In the wine tax’s first year of operation, the ATO collected $523.1 million. In addition, $170.8 million was collected as a result of the luxury car tax, which replaced the sales tax on luxury vehicles.

Capital gains tax raised $5.3 billion in the 2000 tax year. Disposing of or selling an asset was the most common CGT event, with shares accounting for over half of the total amount of capital gains.

The average net capital gain for individuals was $6680 in 1999-2000. According to the ATO, the amount of tax payable on net capital gains has increased considerably over the past decade.

“The considerable increase is attributable to many factors, such as: the privatisation of government assets; demutualisation of insurance entities and the subsequent increase in shareholdings; the share market boom; and the increase in the value of real estate over the last decade,” the ATO says.

Fringe benefits raised $3.4 billion, with the finance, insurance, real estate and business services industries accounting for the largest number of total FBT taxpayers. The main benefit they provided was in terms of loans to employees.

Just over half of the Australian population lodged tax returns for the 2000 income year, with the Government gaining $330 billion in revenue from that source.

The highest earning Perth postcode was 6009, which covers Broadway, Crawley, Dalkeith and Nedlands. The average taxable income there was $65,379. The average taxable income in Australia was $31,178.

Taxpayers in the 35–44 years age group accounted for 22 per cent of the total personal taxpayer population, but with higher average incomes, they accounted for 29 per cent of the total personal tax payable.

Deductions were claimed by more than 80 per cent of individual taxpayers when they completed their 2000 return. These deductions have been valued at $16.3 billion.

Work-related expenses were the most common type of deduction claimed on the 2000 return. They accounted for almost half of all deductions, and generally increased with the income level of the taxpayer. Motor vehicle expenses accounted for the largest share of those work-related expenses, while clothing received the highest number of work-related expense claims.

Rebates and credits totalling $9.1 billion were received in 1999–2000. Imputation credits accounted for half of the total value of the rebates and credits claimed.

About 7,000,000 personal taxpayers were liable for Medicare levy in 1999-2000. Nearly 240,000 higher income taxpayers who did not have private patient hospital cover were also liable to pay the Medicare levy surcharge. They had to pay an average of $595 per person in extra tax.

More than 300,000 taxpayers had HECS debts in 1999-2000. Of these, 57 per cent were female and were liable for 55 per cent, or $284.5 million, of the total HECS debt payable.

With people living longer and having fewer children, we often hear that government will find it increasingly difficult to sustain the payment of the age pension at current levels. By 2051 it is projected that 24 per cent of the Australian population will be aged 65 and older, compared with 12 per cent in 2001. The tax office advises that, in August 2000, 89 per cent of employees had some form of superannuation.

Tax refunds went to more than 7.6 million individuals in the year 2000. The average refund was $1,400 per taxpayer. Now that there is an opportunity to put in a deduction claim for sunscreen, and the baby bonus has been introduced, this year’s return could be even higher.

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