AUSTRALIA Law and Practice Contributed by: William Moore, Frank Hinoporos, Emma Woolley and Todd Bromwich, Hall & Wilcox
directly to the ATO throughout the year increases tax compliance and reduces the risk of large end-of-year tax liabilities. Superannuation Superannuation funds are taxed at a concessional rate – generally 15% on contributions and earnings, with some exceptions. Employers are required to make compulsory superannuation contributions for employees, currently at a minimum rate of 12% of Ordinary Time Earnings (OTE), subject to a statutory cap for high-income earners. State Taxes Australian states and territories impose a range of additional taxes that operate alongside the federal tax system. State-based taxes include: • land tax, which is levied annually on the unim - proved value of land and is subject to varying thresholds and exemptions depending on the jurisdiction; • transfer duty (or stamp duty), which is charged on transactions such as the transfer of real property; • landholder duty, which is a set of rules that form part of the stamp duty regime, but charged on transfers of interests in certain landholding entities; and • payroll tax, which applies to employers whose total payroll exceeds a specified threshold, with rates and thresholds differing between states. Various states and territories charge additional “sur - charge” land tax or transfer duty on foreign persons, foreign-owned entities, or trusts that may include for - eign persons as beneficiaries. Consumption/Value-Added Taxes Goods and Services Tax (GST) is charged at 10% on most goods and services. GST is generally not relevant to private wealth structures unless they are carrying on an enterprise, which may include one-off land development projects. 1.2 Exemptions As noted in 1.1 Tax Regimes , Australia does not impose estate, inheritance or gift taxes at the federal level. However, certain transactions, such as gifts or
asset transfers, may still have tax consequences, par - ticularly under the CGT regime. The CGT regime contains rules that are designed to defer CGT on death. In most cases, when assets pass to beneficiaries, there is no immediate CGT liability. Instead, the beneficiary inherits the deceased’s cost base and CGT only arises on later disposal. Where a beneficiary is a tax-exempt entity (such as a charity) or a non-resident receiving non-taxable Aus - tralian property (TAP) assets, the capital gain must be recognised in the deceased’s final tax return before the asset passes. The superannuation regime provides preferential tax treatment in respect of retirement savings accumu - lated over one’s working life, and certain amounts can be exempt to support income in retirement. Superan - nuation is a highly complex and technical area of law, and non-compliance with superannuation regulation can give rise to substantial penalties. Specialist advice should be sought. 1.3 Income Tax Planning Trusts and Income Distribution Trusts, and in particular discretionary (family) trusts, are sometimes used to distribute income among ben - eficiaries, which can result in a lower overall tax liability for a family group. However, there are strict anti-avoid - ance rules that limit distributions to minors, require family trust elections in some circumstances, and restrict distributions outside a defined family group. The ATO may review arrangements where financial benefits do not correspond with legal entitlements, and arrangements that do not comply with legislative requirements may attract adverse tax consequences. As noted in 1.1 Tax Regimes , from 1 July 2028, the proposed 30% minimum tax on discretionary trusts is expected to reduce the tax advantages traditionally associated with these structures. CGT Assets The tax treatment of capital gains remains important when structuring investments and planning dispos - als. As outlined in 1.1 Tax Regimes , the 50% CGT discount is being replaced with an inflation-indexation model and a minimum 30% tax on capital gains from
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