LESSON 21.4 The Australian taxation system
LEARNING INTENTION By the end of this lesson you should be able to explain the Australian taxation system and how taxation revenue is used.
Tune in Paying taxes isn’t necessarily the most rewarding thing about working, but our taxation system does have many benefits for our society. 1. Mind map reasons why taxes are important in our economy. 2. Develop a list of services and/or products we may not have if there were no taxes to be paid.
FIGURE1 The phrase ‘in this world, nothing is certain except death and taxes’ signifies that it is inescapable that we will all be required to pay taxes.
21.4.1 Australia’s system of taxation Tax is a term used to describe a compulsory financial charge or some other type of levy imposed on an individual, household or business by a government body in order to fund government spending. In Australia, taxation is primarily monitored by the Australian Taxation Office. The Australian government and the individual state and territory governments impose a variety of taxes on individuals, households and businesses. Our tax system can be looked at in a variety of ways. Direct and indirect taxation Direct taxation refers to any tax that falls directly on the taxpayer — for example, income tax, company tax, licence fees. The tax is levied on the income of the individual or business and paid directly by the business. Indirect taxation refers to any tax that is passed on to other tax payers — for example, Goods and Services Tax (GST), sales taxes, import duties. GST is paid by businesses but is passed on to consumers who pay the tax when they buy goods or services. The businesses (sellers) then collect it and pass the tax on to the ATO. Rate of taxation The tax brackets used by the Australian Taxation Office give us a guide as to how we are taxed on our own wages or salaries. Table 1 shows the taxable income ‘brackets’ and then how much, in dollars and cents, a person will pay in tax on this income.
610 Jacaranda Humanities Alive 8 Victorian Curriculum Third Edition
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