This is a comparative study of direct taxation in-between India & Australia.

1. Topic
Taxation System in India & Australia
- A Comparative Study

2. St.Xavier’s College, Kolkata
Speakers
Rishabh Agarwal
Cheyus Singhania
Abhishek Singh
Mudit Gupta
B.Com (Hons.) 2nd Year, Semester 3.

3. Content
1) Introduction
2) Methodology
3) Objective
4) Sub-topics
a) Residential Status
b) Income from Salaries
c) Income from House Properties
d) Computation of Tax Liabilities
5) Conclusion

4. Introduction
This is a comparative study of direct taxation
between Commonwealth Developing &
Developed nations, those being India &
Australia respectively.

5. Methodology
• Comparative Study
• Sample Size: 2
Hence, entire population has been chosen
• Tools: Subjective Analysis & Comparison

6. Objective
• Comparing Direct Taxation between India &
Australia
• An attempt to learn International Taxation
System

7. Residential status
A comparative study between India
and Australia

8. RESIDENTIAL STATUS-GENERAL
NORMS
One has to keep in mind the following norms
while deciding the residential status of an
assessee:-
• Different taxable entities.
• Different kinds of residential status.
• Different residential status of different
assessment year.
• Onus of proof.

9. Basic conditions for resident and
ordinarily resident in India
• An individual is in India in the previous year
for a period of 182 days or more.
• An individual is in India for a period of 60
days or more during the previous year and 365
days or more during 4 years immediately
preceding the previous year
• AN INDIVIDUAL MUST SATISFYANY
ONE OF THE ABOVE CONDITIONS.

10. Additional conditions for resident but
not ordinarily resident in India
• An individual has been resident in India for at
least 2 out of 10 previous year immediately
preceding the relevant previous year.
• An individual has been in India for a period of
730 days or more during 7 years immediately
preceding the relevant previous year.

11. BASIC CONDITIONS FOR
RESIDENTIAL STATUS IN AUSTRALIA
There are four tests to determine whether an individual
is a resident for income tax purposes. An individual can
be classified as a resident for taxation purposes if they
satisfy any of the following conditions:
• If they are making contributions to a Commonwealth
superannuation fund,
• In Australia for more than half the year,
• Have their domicile or permanent place of abode in
Australia or finally
• If they dwell permanently or for a considerable time in
Australia.

12. Taxable Income
• An individual is taxed on global income.
• An individual interest on bank account is
assessed at usual rates.
• An individual in Australia is liable for capital
gains tax.

13. Salary
A comparative study between India & Australia.

14. Identification Number
As with most countries, you will need an
identification number for tax purposes in India as
well as Australia.
A Tax File Number (TFN) is issued by Australia’s
revenue authority, the Australian Taxation Office
(ATO), and can be applied for online or can be
done manually.
A Permanent Account Number (PAN) is issued by
Income Tax Department of India.

15. Submission of the identification
number.
• Should be submitted to employer with other
required details in order to complete the
declaration form.
• If you do not provide your employer will
withhold taxes at the highest tax rate. (46.5%
in Australia)

16. TDS or PAYG
Employers are suppose to withhold some
percentage of the wage or salary paid to the
employees as a deduction to pay to the tax
collecting authority of the country.
In Australia this portion of amount is withheld
under Pay As You Go (PAYG) system every time
the payment of wage or salary is done. The PAYG
is then remitted to ATO(Australian Taxation
Office)
In India this portion of the payment is deducted in
the name of TDS(tax deducted at source).

17. Advance tax or PAYG installments
If you receive untaxed income that is taxable in
the country, you may be asked to pay interim tax
payments by the tax collecting authority of the
country during the tax year in anticipation of your
tax liability on this income.
In Australia these payments are known as PAYG
installments paid to the ATO. ATO notifies.
In India these payments are known as Advance
Tax.(If the Income Tax Liability of any assessee is
more than Rs. 10,000 in a financial year)

18. Due Dates for Advance tax & PAYG
installments.
Due dates for Pay as you go (withholding and instalments)
are July(14th & 28th), August(14th), October(21st, 28th &
31st), February(28th), April(28th).
Due dates for Advance tax payment are:
On or before 15th Sep - Not less than 30% of the Advance
Tax Liability
On or before 15th Dec - Not less than 60% of the Advance
Tax Liability as reduced by the amount, if any, paid in
earlier instalment.
On or before 15th Mar - 100% of the Advance Tax Liability
as reduced by the amount, if any, paid in earlier instalments.

19. Deadline for filing Income Tax Return
• The Australian tax year runs from 1 July to 30
June, with the tax return filing deadline being
31 October following the tax year end.
• In India the last for return filing is 31st of july
of the financial year 1st April to 31st March.

20. In Australia.

21. Superannuation
Employers are required to make minimum
contributions to a qualifying superannuation fund
(a type of pension fund) on behalf of employees
under the Superannuation Guarantee Charge
(SGC) scheme. The contribution rate is 9% on
earnings up to $183,000.
If you hold a temporary visa you may withdraw
the funds in your superannuation account after
you have left Australia permanently, subject to a
35% withholding tax.

22. Fringe Benefits Tax
• Non-cash remuneration is known as Fringe
Benefits.
• Employees are not liable for tax on fringe
benefits.
• Employers are liable to fringe benefit tax
(FBT) @46.5% grossed up, unless specifically
excluded from the FBT act.

23. Living Away From Home
Various concessions exist in relation to benefits provided to
employees who are required to live away from their usual
place of residence for work purposes.
In order to qualify as living away from home (LAFH) you
would
need to have an intention to return to your usual (or normal)
place of residence at the end of your employment or
assignment.
If you are LAFH for work purposes, your employer may
provide
you with tax free housing and a tax free food allowance for
reimbursement of actual costs.

24. Qualifying Criteria
In order to qualify for tax free food and accommodation
allowances or benefits, you would need to meet the following
three criteria:
• The duties of your employment require you to live away from a
home in Australia where you usually reside and it is reasonable
to conclude that you intend to return to that property.
• You have an ownership interest (this includes a lease) in the
place you are living away from.
• The home you are living away from must continue to be
available for your use throughout the LAFH period. It cannot be
let or sublet to a third party. If you qualify, the LAFH tax concessions will be available for the
first 12 months that you are required to live away from home to
perform the duties in a particular location.
There are complex transitional rules that apply to those who
were LAFH prior to 8 May 2012 that may allow you to qualify for
tax free food and accommodation allowances even if you do not
meet all of the criteria mentioned above.

25. Children’s Education Costs in
Australia
• If you are a LAFH (in overseas)
• Employer bears the children’s education cost,
tax free.
• Child should be under 25 years of age.
• It applies to full time education only whether
in Australia or in abroad.
• This covers the costs of fees, books, uniforms,
excursions and any other education costs.

26. Children’s Education Allowance in
India.
• Rs. 100 per month per child.
• Upto a Maximum of Two Children.
• Hostel expenditure for employees child:
Rs. 300 per month per child upto a
maximum of two children.

27. Payroll Tax
• Payroll Tax is levied by each state and territory
government on the gross payrolls of employers
operating in that state or territory.
• The tax is paid by the employer, not the
employee.

28. Income from House Property
Comparative Study of India and
Australia

29. Australia
• Mortgage expenses for a period of 5 years.
• Cannot claim Purchase Price, Legal Fees or
Stamp Duty.
• Records must be kept for a minimum of 5
years.
• Claim deduction of Depreciation and Capital
Works Schedule.

30. Constituents of Rental Income
• Rent Received
• Rental Bond
• Letting or Booking fee
• Government Rebate
• Insurance Payout for Unpaid Rent

31. Deductions for the cost of Setting up
Loans
• Loan Establishment,
• Title Search Fees,
• Costs for Preparing and filing the Mortgage
Documents,
• Mortgage Broker Fees,
• Stamp Duty Charged on Mortgage,
• Property Valuation, and
• Mortgage Insurance.

32. Repairs and Maintenance
• ‘Repairs’ generally involve a replacement or
renewal of a worn out or broken part.
• ‘Maintenance’ is preventing or fixing
deterioration. And that can include painting the
house, oiling a deck, or maintaining plumbing.
• Deductions in respect of Repairs and
Maintenance can be claimed only for let out
property.

33. Depreciation and Capital Works
Schedule
Depreciation- The depreciation schedule is a
record of assets in the house and the amount
you can claim each year.
Capital Works Schedule- The capital works
schedule is a record of the building
construction costs and the amount you can
claim each year, which is usually 2.5% over a
period of 40 years.

34. Repairs and Renovations
• Repairs can be immediately claimed as
deduction.
– Example: replacing broken tiles of kitchen and
bathroom, replacing a stove.
• Renovations cannot be claimed as an
immediate deduction. These are Building
Costs which can be claimed @2.5% over a
period of 40 years.
– Example: replacing broken fence.

35. Comparison
India
• Deduction allowed for Self
occupied Property in respect
of Interest on Loan up to Rs.
150000 for purchase and
construction and Rs. 30000
for repairs and renewals. No
upper limit for Let Out
Property.
• Only Standard Deduction
@30% of GAV is allowed
for Let Out Property.
Australia
• Deduction allowed for
Interest on Loan on Let Out
Property.
• Depreciation, Repairs,
Renovations expenses can
be claimed as a deduction
without an upper limit for
Let Out Property.

36. Calculation of Income from House
Property
– Gross Annual Value
• Municipal Rent/Fair
Rent(higher)
• Standard Rent(max.)
• Rent Received
– Less: Municipal Taxes
paid
– Net Annual Value
• S.D. @ 30%
• Interest on Loan
– Income from H.P.
– Actual Rent Received
– Less: Expenses Incurred

37. Computation of Tax Liability
Comparative Study of India &
Australia

38. Individual Income Tax Rates – Australia
Taxable income Tax on this income
0 – $18,200 Nil
$18,201 – $37,000 19c for each $1 over $18,200
$37,001 – $80,000 $3,572 plus 32.5c for each $1 over $37,000
$80,001 – $180,000 $17,547 plus 37c for each $1 over $80,000
$180,001 and over $54,547 plus 45c for each $1 over $180,000

39. Individual Income Tax Rates – India
Taxable income Tax on this income
Where the total income does not exceed
Rs. 2,50,000/-.
Nil
Where the total income exceeds Rs.
2,50,000/- but does not exceed Rs.
5,00,000/-.
10% of amount by which the total income
exceeds Rs. 2,50,000/-.
Less ( in case of Resident Individuals
only) : Tax Credit u/s 87A - 10% of
taxable income up to a maximum of Rs.
2000/-.
Where the total income exceeds Rs.
5,00,000/- but does not exceed Rs.
10,00,000/-.
Rs. 25,000/- + 20% of the amount by
which the total income exceeds Rs.
5,00,000/-.
Where the total income exceeds Rs.
10,00,000/-.
Rs. 125,000/- + 30% of the amount by
which the total income exceeds Rs.
10,00,000/-.

40. A Comparison
Forex Rate (1 Aus$ = Rs. 56.80)
Income @ Australia Tax Rate Income @ India Tax Rate
Rs 0 – 10,33,700 Nil Rs 0 – 2,50,000 Nil
Rs 10,33,756 –
21,01,476
19% on amount
above Rs.10,33,700
Rs. 2,50,001 to Rs.
5,00,000
10% on amount
above Rs.2,50,000
Rs. 21,01,532 –
45,43,733
Rs.2,02,877 +
32.5% on amount
above Rs.21,01,476
Rs. 5,00,001 to
10,00,000
Rs.25,000 + 20%
on amount above
Rs.5,00,000
Rs. 45,43,789 –
1,02,23,400
Rs. 9,96,610 + 37%
on amount above
Rs. 45,43,733
Exceeding
Rs.10,00,000
Rs.1,25,000 + 30%
of amount above
Rs.10,00,000
Exceeding
Rs.1,02,23,400
Rs. 30,98,087 +
45% on amount
above Rs.
1,02,23,400
--- ---

41. Example 1
Mr. A earns Rs.10,33,700/- (12,800 $)
• If his income was in Australia. Tax he would
pay = Nil.
• If his income was in India. Tax he would pay =
Rs.125,000 + 10,110 = Rs. 135,110
• Now See the next Eg.

42. Example 2
Mr. A earns Rs.50,00,000/- (88,028 $)
• If his income was in Australia. Tax he would
pay = Rs.9,96,610 + 1,68,818 = Rs.11,65,428
• If his income was in India. Tax he would pay
• = Rs.125,000 + 12,00,000 = Rs. 13,25,000
• There you see the difference.

43. The point is…
In order to maintain a same standard of
living a person earning Rs.10,00,000 in
India will need to earn Rs.50,00,000 in
Australia & pay 12.5% higher taxes there.
Duh?

44. Conclusion
Australia is a Developed Nation.
Their Economy is much-much stronger than ours.
We can conclude that the income of 18,200$ their is
equivalent to Rs.2,50,000 here.
Even when it comes to Tax, on comparison we find that
they have relatively higher Tax rates than ours.
We crib about Tax Rates in India being abnormally
high. Agreed that our system of taxation is complicated,
is there any other excuse?
The only conclusion is that they are developed because
they pay their taxes & the government maintains
transparency while we don’t.

45. Limitations
Because of time constraints & limit in
our knowledge of taxation. We
covered only the portions as in the
ppt.
Feedback for improvements are
appreciated.

46. Bibliography
We would like to acknowledge the following
sources for their valuable information
• en.wikipedia.org/wiki/Taxation_in_Australia
• en.wikipedia.org/wiki/Income_tax_in_Australia
• www.ato.gov.au
• en.wikipedia.org/wiki/Taxation_in_India
• E&Y Magazine
• www.numeo.com
• And any other source whom we might have
missed

47. The Team
From left to right: Mudit Gupta, Ahishek Singh, Cheyus Singhania & Rishabh Agarwal

48. Thank You