ClubPack (current to 19 June 2003)
Chapter 3 - Other taxes and obligations
| This document has been archived. It is current only to 19 June 2003. |
In this chapter we outline some other types of taxes and obligations that affect most organisations. Even organisations that are income tax exempt can have obligations for other taxes.
The taxes and obligations covered in this chapter are:
- Australian Business Number (ABN)
- goods and services tax (GST)
- fringe benefits tax (FBT)
- Pay As You Go (PAYG)
- deductible gift recipients (DGRs)
- Superannuation Guarantee Charge, and
- State government taxes and duties.
Contact details are provided should you wish to obtain further information.
Australian Business Number (ABN)
Quick Reference
- The Australian Business Number (ABN) is a new single identifier that businesses and non-profit organisations will use in their dealings with the ATO.
- You need an ABN to register for GST and other elements of The New Tax System.
The Australian Business Number (ABN) is a new single identifier that clubs, societies and associations will use to:
- register for GST and claim input tax credits
- register for Pay As You Go (PAYG)
- deal with investment bodies
- apply to the ATO for endorsement as a deductible gift recipient (DGR) if they operate a gift deductible fund or institution
- interact in future with other government departments and agencies, and
- interact with the ATO on other taxes, including:
- Diesel and Alternative Fuels Grants Scheme
- luxury car tax, and
- wine equalisation tax.
Your ABN registration details will become part of the Australian Business Register (ABR) which the ATO will maintain for all Commonwealth purposes. The publicly available information on the ABR will allow people to find out whether the entities they are dealing with have an ABN, are registered for GST or are endorsed as deductible gift recipients.
Who is entitled to register for an ABN?
To be entitled to an ABN you must be:
- a company registered under the Corporations Law
- a government department or agency
- an entity carrying on an enterprise in Australia
- a non-profit sub-entity for GST purposes, or
- be making supplies connected with Australia in carrying on an enterprise.
An entity for ABN purposes means an individual, a body corporate, a corporation sole, a body politic, a partnership, an unincorporated association or body of persons, a trust or a superannuation fund.
The definition of an enterprise for ABN purposes includes activities done in the form of a business, or in the form of an adventure or concern in the nature of trade. The use of the phrase 'in the form of' indicates that, as well as activities that constitute a business or an adventure in the nature of trade, an enterprise also includes an activity or activities done in the form of a business or in the form of an adventure or concern in the nature of trade. This includes an activity or series of activities that, if done for profit, would satisfy the ordinary concept of 'business' or 'adventure or concern in the nature of trade'.
The fact that activities of an entity are limited to making supplies to members of the entity does not prevent those activities being in the form of a business or an adventure or concern in the nature of trade.
An activity or activities of a private recreational pursuit or hobby is not an enterprise for ABN purposes.
The meaning of entity carrying on an enterprise for the purposes of entitlement to an ABN is discussed in detail in Miscellaneous Taxation Ruling MT 2000/1.
Certain non-profit organisations that are registered for GST have the option of treating their small independent branches (units) as if they were separate entities for GST purposes and not part of the main organisation. The characteristics are explained in the GST section. If a non-profit sub-entity registers for an ABN, it can be used for GST purposes only.
How do you register for an ABN?
You can register:
- electronically through the Business Entry Point (BEP) at www.business.gov.au
- on a paper form by mail - phone the ATO on 13 24 78 for an application, or
- through a tax agent.
You can register for an ABN and GST on the same form.
If entitled, your organisation should register for at least one ABN regardless of the number of enterprises you undertake.
Example
However, if your enterprises are carried on by a number of different entity types, each entity must register for an ABN in its own right.
Example
If your organisation is a subsidiary of a governing body, it is advisable that you discuss ABN registration with your governing body.
Need more information?
Further information about the ABN is available from the sources listed at the end of this guide.
Goods and services tax (GST)
Quick Reference
- GST is a broad-based tax of 10 per cent on the supply of most goods and services consumed in Australia.
- Non-profit bodies must register for GST if their annual turnover is $100 000 or more and they may choose to register if their annual turnover is lower.
- Other organisations must register for GST if their annual turnover is $50 000 or more and they may choose to register if their annual turnover is lower.
- Registered organisations can claim credits for the GST included in the price of goods and services they buy.
GST is a broad-based tax of 10 per cent on the supply of most goods, services and anything else consumed in Australia. It is also payable on most goods imported into Australia regardless of whether you are registered or not. GST applies from 1 July 2000.
Organisations that are suppliers of goods and services and are registered (or required to be registered) for GST will have to include 10 per cent GST on all of their supplies that are not GST- free or input taxed.
Which organisations are required to register for GST?
A non-profit body must register for GST if its annual turnover is $100 000 or more. If its turnover is less, it can register if it chooses to. Only organisations that are registered can claim credits (input tax credits) for the GST included in the price of goods and services they buy.
An organisation that is not a non-profit body must register for GST if its annual turnover is $50 000 or more. If its turnover is less, it can register if it chooses to.
You can register for GST and apply for an Australian Business Number (ABN) on the same form.
GST branches
A GST-registered organisation which operates through a branch structure may choose to register a branch or branches separately for GST. By registering a branch of your organisation as a GST branch, it effectively operates as a distinct entity for GST purposes.
To register as a GST branch, the entity must:
- maintain an independent system of accounting
- be separately identifiable because of its activities or location
- carry on (or intend to carry on) an enterprise through the branch, and
- not be a member of a GST group.
Non-profit sub-entities
Most non-profit entities that are income tax exempt with small independent branches (units) have the option of treating their units as if they were separate entities for GST purposes and not part of the main organisation.
The main organisation must itself be registered for GST to be able to use this option.
A unit will be considered to be independent if it:
- maintains an independent system of accounting
- can be separately identifiable because of its activities or location, and
- is referred to in the entity's records as a separate sub-entity for GST purposes.
For example, units could include a branch, fete, lamington drive or fundraising dinner.
This means that where the unit's turnover is less than $100 000, the unit can choose whether it registers for GST or not. Where the unit has a turnover of $100 000 or more, it will have to register separately for GST and will have the same rights and obligations as other GST-registered entities.
In the case of non-profit sub-entities, the liability for all GST obligations of the unit will be imposed on the people responsible for the management of the unit.
What if an organisation is registered for GST?
Clubs, societies and associations, their branches and non-profit sub-entities that are registered, or required to be registered, include 10 per cent GST on all their taxable supplies. No GST is payable on GST- free or input taxed supplies. They are also entitled to claim a credit for GST they have paid for acquisitions used in making taxable and GST- free supplies. This is called an input tax credit.
There is no entitlement for an input tax credit for anything acquired to make an input taxed supply. If the input tax credits are greater than the GST included, the registered entity will receive a refund or have the credit applied to other tax debts, if there are any.
What if an organisation is not registered for GST?
Organisations that are not registered and are not required to be registered do not include the 10 per cent GST on their supplies. However, these organisations are not able to claim input tax credits for the GST they have paid on their purchases.
In the same way, non-profit sub-entities that are not registered and not required to be registered will not be liable to include GST and will not be able to claim input tax credits.
Need more information?
Industry-specific booklets have been produced to provide details about how GST and The New Tax System operate. Topics covered include:
- Accommodation
- Arts and Culture
- Charitable, Religious and Non-profit Organisations
- Child and Aged Care
- The Health Industry
- Higher Education and Training
- Registered Clubs, Pubs and Hotels
- Schools
- Sport, Recreation and Gaming, and
- Travel and Tourism.
Further information, including these booklets, is available from the sources listed at the end of this guide.
Fringe benefits tax (FBT)
Quick Reference
- Employers who provide fringe benefits to employees are subject to FBT.
- Most non-government income tax exempt organisations will qualify for a rebate if they have to pay fringe benefits tax.
- Where the total taxable value of an employee's fringe benefits exceeds $1000 in an FBT year, an amount must be reported on the employee's group certificate or payment summary.
FBT is a tax payable by employers who provide fringe benefits to their employees or to associates of their employees. It operates to provide comparable tax treatment of fringe benefits and cash benefits.
FBT is a tax separate from income tax. Even if an organisation is exempt from income tax, it may still have to pay FBT. The amount of FBT is calculated on the taxable value of the fringe benefits provided.
What is a fringe benefit?
A fringe benefit is an employment-related benefit provided to an employee or an associate of the employee (typically a family member). Benefits may be rights, privileges or services. For example, a fringe benefit is provided when an employer:
- allows an employee to use a work car for private purposes
- gives an employee a cheap loan, or
- pays an employee's private health insurance costs.
Some employers will need to distinguish between employees and volunteers. A volunteer is a person who is not paid for work in either cash or fringe benefits. Volunteers may be reimbursed for out-of-pocket expenses. Where more than this reimbursement is provided, the recipient is generally regarded as an employee.
Exempt benefits
Some benefits are exempt from FBT. Examples of exempt benefits are certain minor benefits valued at less than $100, some taxi travel, certain work-related items (such as mobile phones primarily for use in employment and laptop computers) and work-related preventative health care.
Certain other benefits are exempt (subject to a capping limit in certain circumstances - see Recent changes ) when provided by the following organisations:
- public benevolent institutions (PBIs)
- religious institutions for certain employees, and
- non-profit companies whose activities include caring for elderly or disadvantaged people and who provide benefits to live-in carers.
What organisations are eligible for a rebate?
Most non-government organisations that are income tax exempt will qualify for an FBT rebate. Eligible rebatable employers are entitled to have their FBT liability reduced by a rebate equal to 48 per cent of the gross FBT payable. The Recent changes section outlines changes that may impact on rebatable employers.
What are the fringe benefits tax reporting requirements?
From 1 April 1999, employers must keep records that show the taxable value of certain fringe benefits provided to individual employees.
If the total taxable value of reportable fringe benefits provided to an employee in an FBT year exceeds $1000, the employer must record the grossed-up taxable value of those benefits on the employee's group certificate or payment summary for the corresponding year.
The requirement to report ensures that fringe benefits are taken into account when determining an employee's:
- eligibility to superannuation rebates and deductions
- liability for superannuation contributions surcharge, termination payments surcharge and Medicare levy surcharges
- entitlement to certain income-tested government benefits
- child support obligations, and
- Higher Education Contribution Scheme repayments.
The employee does not have to pay income tax on the reportable fringe benefits.
Some benefits that are exempt from FBT may still need to be reported on group certificates. These are benefits that are exempt only because they are provided to:
- live in carers of elderly or disadvantaged people employed by religious institutions, non-profit companies and government bodies, and
- employees of PBIs, including government employees who work in a public hospital.
These benefits are known as quasi-fringe benefits. Where the total taxable value of actual fringe benefits plus quasi-fringe benefits provided to an employee exceeds $1000, the grossed-up amount is reported on the employee's group certificate or payment summary. The requirement to report exempt fringe benefits does not create an FBT liability for the organisation providing the exempt benefit.
Why is the amount shown on the group certificate or payment summary 'grossed-up'?
For the purposes of group certificate reporting, grossing-up reflects the gross salary that would have to be earned to purchase the benefit from after-tax dollars. This is calculated by using the FBT rate, which is equal to the highest individual marginal tax rate, including the Medicare levy.
The grossed-up taxable value is calculated by multiplying the total taxable value of the fringe benefits by 1/(1-the rate of FBT).
Example
| 1 | X $1100 = $2136 |
| 1-0.485 |
Recent changes
Legislative changes have been made by the Government in relation to FBT. The changes include:
- a measure designed to cap the concessional FBT treatment available to public benevolent institutions and certain other non-profit organisations. The cap to apply to charities and certain other non-profit organisations is $30 000 of grossed-up taxable value per employee, effective from 1 April 2001. The cap to apply to public and non-profit hospitals is $17 000 of grossed-up taxable value per employee, effective from 1 April 2000. Amounts of fringe benefits above these caps will be subject to normal FBT treatment. FBT exempt benefits and some fringe benefits are not subject to capping
- certain housing benefits provided to employees living and working in remote areas are exempt from FBT from 1 April 2000
- a concession to charities and certain hospitals operating in regional areas, by broadening the definition of remote areas for the purpose of the remote area housing benefit exemption. This change takes effect from 1 April 2000
- a new way to calculate FBT due to the introduction of a goods and services tax (GST)
- GST may be payable in relation to employee contributions for fringe benefits.
Need more information?
If you have any questions or need more information on FBT, please phone the ATO's FBT enquiry service on 13 33 28.
Our staff will be able to answer your specific queries and provide you with our current FBT publications.
Further information is also available from the sources listed at the end of this guide.
Pay As You Go (PAYG)
Quick Reference
- PAYG replaces most tax instalment and withholding systems from 1 July 2000. The start date for paying PAYG instalments will be different for organisations with an earlier or later accounting period.
- PAYG instalments enable an organisation to provide for its final taxation liability by paying tax in instalments throughout the year.
- PAYG withholding is the system through which an organisation withholds tax from payments it makes. It encompasses the original Pay As You Earn (PAYE) and tax file number (TFN) withholding obligations and has three new withholding categories - voluntary agreements with contractors, no-ABN withholding and labour hire arrangements.
- Non-profit and income tax exempt organisations are not exempt from PAYG withholding.
What is Pay As You Go (PAYG)?
PAYG starts from 1 July 2000 for most organisations. PAYG is a single, integrated reporting system which replaces more than ten existing instalment and reporting systems. These include provisional tax, company and superannuation fund instalments, pay as you earn (PAYE), the prescribed payments system (PPS), the reportable payments system (RPS), and dividend, interest and royalty withholding for non-residents.
PAYG also simplifies how you pay tax by aligning dates for payment.
PAYG consists of two arms: PAYG instalments and PAYG withholding.
PAYG instalments applies from the start of the 2000-01 income year, which for most taxpayers is 1 July 2000. The start date for PAYG instalments will be earlier or later for companies that do not balance on 30 June.
PAYG withholding is applicable to payments made on or after 1 July 2000.
What is PAYG instalments?
PAYG instalments replaces provisional tax and company and superannuation fund instalments.
Under PAYG instalments, taxpayers who are notified by the ATO of an instalment rate will be required to pay their own tax by instalments.
PAYG allows the timing of instalments by businesses and investors to reflect their current trading and income flows.
What is PAYG withholding?
Under PAYG withholding, if you make certain listed payments you will be required to withhold an amount from the payment and send this to the ATO.
Your organisation has PAYG withholding obligations as a payer if it makes one of the following types of payments:
- salary, wages, commission, bonuses or allowances to an employee
- remuneration to a director or member of committee of management
- salary, wages, commission, bonuses or allowances to an office holder (such as a member of the defence forces, a police officer or person holding office under the Constitution including members of parliament)
- return to work payments
- retirement payments (that is, unused leave), eligible termination payments, pensions and annuities
- social security and compensation payments
- payments for work or services under labour hire arrangements or prescribed by regulations
- payments for work or services where your organisation and an individual have a voluntary agreement to withhold
- payments for a supply (services or goods) to another business which does not quote an ABN, and
- certain dividend, interest and royalty payments.
The obligation to withhold amounts from payments of salary or wages to employees (former PAYE), and from other payments such as dividends, interest or royalties paid to non-residents, carries over into the new system. The PPS and RPS systems cease to operate after 30 June 2000.
How does PAYG work for my employees?
PAYG withholding will replace and modernise the PAYE system. Under PAYE, salary or wage earners paid their income tax and Medicare levy by instalments deducted from their pay. Under PAYG this has not changed. However, it is proposed that Student Financial Supplement Scheme debits will also be collected under the new PAYG arrangement.
As an employer, you withhold the correct amount from your employee's salary or wage and send it to the ATO. Tax tables will be provided to tell you how much to withhold. These are available from the ATO and can also be obtained directly from our web site.
At the end of the financial year, you give each employee a payment summary which shows how much they were paid during the year and how much was withheld. The payment summary is then included in their tax returns. This operates in a similar way to group certificates under the old PAYE system.
What are my obligations for other PAYG withholding payments?
The most common circumstances that could arise where an organisation may have PAYG withholding obligations other than for employees would be:
- payments for work or services under voluntary withholding agreements, and
- payments for a supply (services or goods) to another business which does not quote an ABN.
The rates of withholding depend upon the type of payment. For example, the 'no ABN quoted' withholding rate is the highest marginal tax rate plus the Medicare levy (currently 48.5%), while the rate to be used for a voluntary withholding agreement is in the tax tables.
You should contact the ATO to find out the rates that apply to other payments.
A payment summary is also issued to individuals and entities (who are not employees) where PAYG withholding is made for the other types of payments subject to PAYG withholding.
Are there exceptions to withholding when an ABN is not quoted?
Yes. An amount need not be withheld where:
- the whole of the payment is exempt income of the supplier
- the payer is an individual paying for a supply of a private or domestic nature
- the payment does not exceed $50
- the supply is made by a member of a local governing body under a State or Territory law, or
- the payee has made a written, signed statement that the supply is private or domestic in nature, or relates to a hobby.
Are any organisations exempt from PAYG withholding?
No. Every payer has to withhold from payments subject to PAYG withholding. Organisations that are exempt from income tax are not exempt from PAYG withholding obligations.
What to do if you have PAYG withholding obligations?
If you make payments that are subject to PAYG withholding, you will need to register. You should contact the ATO's Small Business Helpline on 13 28 66 or the business Tax Reform Infoline on 13 24 78 .
Where a payment you make is subject to PAYG withholding, you will be required to withhold an amount from the payment and send the amount withheld to the ATO by the due date. If you are a small or medium withholder, the amount withheld will be reported on your Business Activity Statement along with any GST, PAYG instalments or FBT amounts. Any credits you are entitled to (such as input tax credits for GST) will be offset against any amount of PAYG withholding and other taxation liabilities you are required to report on your Business Activity Statement. You will be required to remit these amounts monthly or quarterly, depending on your withholder status.
If you are a large withholder, you are required to send withheld amounts more frequently.
At the end of the year, you will be required to submit to the ATO an annual report which reconciles all withholding payments you have made to the ATO during the financial year.
Is an organisation subject to PAYG withholding on payments it receives?
Yes. An organisation may have an amount withheld from a payment it is due to receive if it does not quote its ABN or tax file number (TFN) to the payer.
The following payments are subject to PAYG withholding:
- a supply made by an organisation where it has not quoted its ABN on an invoice, or
- dividends and interest where an organisation has not quoted its TFN or ABN to a financial institution.
What happens if an organisation does not quote its ABN on an invoice?
Where an ABN has not been quoted, a payer must withhold the highest marginal tax rate plus Medicare levy (currently 48.5 per cent) from a payment for a supply.
However, withholding is not required if one of the exceptions applies to the payment (see here ).
For example, there is no withholding if the payment would be exempt income of an income tax exempt organisation.
What happens if an organisation does not quote its TFN on its investments?
Under the tax law, the investment body (such as a bank, building society, unit trust or public company) must withhold an amount from the interest or dividends payable on the investments if an organisation has not quoted its TFN.
The amount withheld can be claimed as a credit when the organisation lodges its tax return.
The exceptions to this rule are:
- where an organisation has quoted its ABN to the investment body and the investment is held in the course or furtherance of an enterprise of the organisation, or
- where an organisation does not have a TFN and is not required to lodge an income tax return and it advises the investment body of the reason for not being required to lodge a return for the income year. Lodging income tax returns is explained here.
Can an organisation obtain a refund of any PAYG withholding amount withheld in error from a payment it receives?
Yes. Depending on the circumstances, an organisation has the following options:
- the payer (the entity that withheld the PAYG amount) may refund to the organisation where the payer becomes aware of the error or the organisation applies to the payer for a refund, before the end of the 21 July following the financial year in which the amount was withheld
- if the above situation does not apply and the withheld amount has already been paid to the ATO, the organisation may apply direct to the ATO for a refund, and
- if the organisation lodges income tax returns, it may choose to claim the amount as a credit when it lodges a return at the end of the financial year.
Need more information?
Further information about current and new tax instalment and withholding systems is available from the sources listed on the back cover of this guide.
Deductible gift recipients (DGRs)
Quick Reference
- To receive income tax deductible gifts, an organisation must be either endorsed as a DGR or listed by name in the tax law as a DGR.
Some types of organisations are entitled to receive income tax deductible gifts. They are called deductible gift recipients (DGRs).
To be a DGR, an organisation must be:
- listed by name in the income tax law as a DGR (there are fewer than 200 of these), or
- endorsed as a DGR.
To be endorsed as a DGR, a club, society or association must:
- have an Australian Business Number (ABN)
- be covered by one of the categories of DGR set out in the tax law
- maintain a special fund to receive gifts
- be in Australia, and
- apply to the ATO for endorsement. These requirements are explained in GiftPack which is available from the ATO by phoning 13 24 78 .
Need more information?
Further information about deductible gift recipients is available from the sources listed on the back cover of this guide.
Superannuation Guarantee Charge (SGC)
Quick Reference
- All clubs, societies and associations who are employers are subject to the Superannuation Guarantee legislation.
- A Superannuation Guarantee Charge must be paid if an insufficient level of superannuation support is provided for the organisation's employees.
Your organisation may be affected by the Superannuation Guarantee (SG) legislation if it has employees.
Under the SG legislation, an employer is required to provide a prescribed minimum level of superannuation support for most of its employees. Employers who do not provide enough superannuation support will have to pay a Superannuation Guarantee Charge (SGC).
The SGC is not a deductible expense.
What organisations are exempt from the SGC?
All organisations that are employers are subject to the SG legislation. Even organisations that are exempt from income tax have obligations under the SG legislation.
Does your organisation need to make superannuation contributions for its employees?
Your organisation will need to make superannuation contributions for its employees to avoid paying the SGC.
Most employees, whether full-time, part-time or casual, are covered by the SG legislation.
Exceptions include employees who are:
- paid less than $450 in any calendar month; superannuation does not have to be provided for that month
- aged 70 or over (65 for 1996-1997 and earlier income years)
- non-resident employees who are paid solely for work undertaken outside Australia
- under 18 years old and employed part-time (that is, for no more than 30 hours a week), or
- employed for no more than 30 hours a week to do work that is primarily of a private or domestic nature.
Need more information?
If you have any questions or need more information on Superannuation Guarantee, please contact the Superannuation Hotline on 13 10 20 for the cost of a local call. This number is linked to the Translation and Interpreting Service for non-English speakers.
For the cost of a local call you can now have information sheets faxed to you - have your fax machine ready and call 13 28 60 .
Alternatively, our internet web site address is www.ato.gov.au/super .
State government taxes and duties
Quick Reference
- State and Territory taxes include stamp duty, pay-roll tax, land tax, financial institutions duty and debits tax.
- Each State has its own law for these taxes, administered by its revenue office. While the laws between States are comparable, there are some variations.
- Some State taxes will be abolished as a result of GST.
- Contact details for State and Territory revenue offices are provided at the end of this section - enquiries about State taxes should not be directed to the Australian Tax Office (ATO).
This section provides an overview of the following State taxes: stamp duty, payroll tax, land tax, financial institutions duty, and debits tax.
Each State has its own laws for these taxes, administered by its revenue office from which further information is available. Contact details are provided at the end of this section.
Enquiries about State and Territory taxes should not be directed to the ATO.
Stamp duty
Stamp duty is a tax on written documents ('instruments') and certain transactions including motor vehicle registrations and transfers, insurance policies, leases, mortgages, hire purchase agreements and transfers of property (such as businesses, real estate or 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.
Stamp duty on publicly listed marketable securities will be abolished from 1 July 2001.
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.
Payroll tax should not be confused with PAYG withholding tax, collected by the ATO. Payroll tax is payable to the State by an employer, based on the total wages paid to all employees. PAYG is the tax deducted from an individual's income and forwarded to the ATO. PAYG is explained further.
Certain organisations may be exempt from payroll tax provided specific qualifying conditions are satisfied. These organisations may include religious institutions, public benevolent institutions, public or non-profit hospitals, non-profit non-government schools or colleges providing education at secondary level or below, municipal councils and charitable organisations.
As requirements vary between States, employers should seek clarification from their local State or Territory revenue office.
Land tax
Land tax is imposed in all States and the ACT, but not in the Northern Territory. It is a tax levied on landowners except in the ACT where it is levied on lessees under a Crown lease.
Landowners are generally liable for land tax when the unimproved value of taxable land exceeds certain thresholds. 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. These organisations generally include non-profit societies, clubs and associations, religious institutions, public benevolent institutions and charitable institutions.
As requirements vary between States, organisations should seek clarification from their local State or Territory revenue office.
Financial institutions duty (FID)
Currently FID applies in all States and Territories, except Queensland, although it will be abolished from 1 July 2001. FID is a tax on the receipt of money by a financial institution. The receipt may involve the physical receipt of money (for example, a deposit by a customer into a bank account) or the crediting of an account (for example, the credit of interest earned or the transfer of money from another bank account).
While liability for the payment of FID rests with financial institutions, legislation allows for the charge to be recouped from customers.
There are limited exemptions from FID and eligibility for exemption varies across jurisdictions. Bodies which may be eligible to conduct an account exempt from FID include registered financial institutions, charitable or public benevolent institutions, public hospitals, public schools and certain government departments.
As requirements vary between States, organisations should seek clarification from their local State or Territory revenue office.
Debits tax
Debits tax is charged on debit transactions (for example withdrawals, account keeping fees etc) to accounts with cheque drawing or payment order facilities. Debits tax is not charged on reversals of credit transactions or deductions for debits tax. Debits tax is scheduled to be abolished by 1 July 2005, subject to review by the Commonwealth, States and Territories.
Debits tax was previously known as Bank Account Debits Tax or BAD Tax.
Financial institutions and account holders are jointly liable for debits tax, however it is usually paid by the financial institution and recouped from the account holder.
There are limited exemptions from debits tax and eligibility differs between jurisdictions. Debits made to accounts held by bodies such as public benevolent institutions, religious institutions, public hospitals and government schools are generally not taxable.
As requirements vary between States, organisations should seek clarification from their local State or Territory revenue office.
Contact details for further information are listed below.
NSW Office of State Revenue
| Revenue SA
|
Queensland Office of State Revenue
| Territory Revenue Management
|
ACT Revenue Office
| State Revenue Office Tasmania
|
State Revenue Office of Victoria
| State Revenue Department of Western Australia
|
Appendices
ATO references:
NO NAT 13727