Australia Financial Sector Tax Guide
Australian financial sector taxation. The guide covers: the banks and the financial institutions taxation — the 'banks' and the 'financial institutions' (the 'ADIs' — the 'Authorised Deposit-taking Institutions') are 'subject to the corporate tax' at the rate of 30% (the 'standard corporate rate'); the 'banks' pay the 'Major Bank Levy' (the 'MBL') — the 'annual levy of 6%' on the 'liabilities above $100 billion' (the 'major banks' — the 'CBA, the Westpac, the NAB, the ANZ, and the Macquarie Bank'); the 'financial institutions' may also be 'subject to the 'Financial Institutions Duty (the 'FID')' — the 'FID' was 'abolished from the 1 July 2001' (the 'FID is NOT applicable'); the superannuation fund taxation — the 'superannuation funds' are 'subject to the concessional tax rate of 15% on the 'investment income' and the 'contributions tax'; the 'super funds in the 'pension phase' are 'exempt from the tax on the pension income' (the 'exempt current pension income — the 'ECPI'); the 'super funds' also 'pay the 'supervisory levy' (the 'annual levy' for the 'SMSFs' — $259 per year, and for the 'large APRA-regulated funds'); the insurance company taxation — the 'insurance companies' (the 'life insurance companies' and the 'general insurance companies') are 'subject to the corporate tax at 30%' (the 'standard corporate rate'); the 'life insurance companies' are 'subject to the 'life insurance tax regime' — the 'segregated assets' (the 'shareholders' fund' and the 'policyholders' fund') and the 'non-segregated assets' are 'taxed at the different rates'; the 'general insurance companies' pay the 'tax on the underwriting profit' and the 'investment income'; the GST on the financial supplies — the 'financial supplies' (the 'banking services', the 'insurance services', the 'superannuation services', the 'investment services') are 'input-taxed supplies' under the 'GST Act 1999' (the 'Division 40 of the GST Act'); the 'input-taxed financial supplies' mean that the 'financial institution does NOT charge the GST on the fees and the charges' BUT the 'financial institution CANNOT claim the full input tax credits on the expenses' (the 'reduced input tax credits — the 'RITCs' — are available at 75% for the 'certain expenses'); the 'financial institutions' use the 'GST apportionment' (the 'input-taxed supplies apportionment') to 'calculate the allowable input tax credits'.
Banks & Major Bank Levy
- Corporate tax at 30%: The 'banks and the ADIs' pay the 'corporate tax at the standard rate of 30%'.
- Major Bank Levy: The 'annual levy of 6%' on the 'liabilities above $100 billion' for the 'major banks'.
For the corporate tax rates and the company tax returns, see our Corporate Tax Guide →.
Super & Insurance Tax
- Super fund tax at 15%: The 'super funds' are 'taxed at 15%' on the 'investment income' and the 'contributions'.
- Insurance companies: The 'life and the general insurance companies' are 'taxed at 30%'.
- ECPI exemption: The 'pension phase income' is 'exempt from the tax' (the 'ECPI').
For the superannuation fund tax and the SMSF rules, see our Superannuation Guide →.
GST on Financial Supplies
- Input-taxed supplies: The 'banking and the insurance services' are 'input-taxed supplies' — the 'GST is NOT charged'.
- Reduced input tax credits (RITCs): The '75% RITCs' are available for the 'certain financial supply expenses'.
For the GST rules and the input-taxed supplies, see our GST Guide →.