How does the system of Federal Tax work in Australia?
In Australia the federation is formed under a constitutional system where effectively the citizens of each state of Australia have voted to form a constitutional federation. In 1901 the federation formed to protect Australia as a continent and provide economic benefits from trade between the states. At this time, the commonwealth which was formed also gained power of taxation. However, at the time the powers of the commonwealth were limited to those enumerated in the constitution and the states were given the powers that remained. Many of the states consitutions say that they have the power to enact law for the ‘peace, order and good government’ of the state which is an incredibly broad notion. However, this is federal framework around which federal taxation has evolved. The commonwealth can levy its taxes under the taxation power in Section 51 of the Constitution. This power of the federal government is for taxation, under Section 51(ii) it is for ‘taxation; but so as not to discriminate between States or parts of States’. This broad power has allowed the creation of the major forms of federal taxation such as personal income tax, company income tax, Goods and Services Tax and Fringe Benefits Tax. Some of the other sources of federal government revenue occur from different sources such as customs and excise which relates to another power of the federal government under the constitution. Also the Superannuation Contribution Tax is part of the taxation created under the taxation power of the Commonwealth. In the past, it has been debated in the courts as to the effect of the GST on the S.51(ii) power because some states argue that the redistributive nature of the GST makes it discriminatory against larger population states including New South Wales. This is because, proportionally, New South Wales people pay more GST than their counterparts in lower population states but receive less of the funding which results from GST. It therefore may be considered to discriminate between the states.
How do I get help in complying with my federal tax obligations?
If you have a question about any of the Federal Taxes and how they relation to the application of your taxation obligations or you need legal advice about any aspect of the taxation law we have taxation lawyers online now to assist you or you post your query to our contact from to the right or to the question box below.