UAE, Hong Kong and Russia best for tax

The United Arab Emirates (UAE), Hong Kong and Russia have the most attractive personal tax regimes, according to a survey by investment services firm Mercer.

Mercer's Worldwide Individual Tax Comparator Report found Australia ranked in the middle of the pack.
Belgium, Denmark and Hungary had the least attractive personal tax regimes.

The survey of tax and benefits systems across 32 markets quoted tax rates based on the average for a middle manager earning $91,000 per annum.

The survey also found married employees with two children were better off than single employees.
The Mercer report said single managers could do best in terms of net income in the UAE, which did not assess any income tax and only required that employees make a contribution of five per cent of gross salary in social security contributions.

The next best tax regime was Russia, which applied a flat tax of 13 per cent.

Hong Kong was third, requiring 14.2 per cent of gross base salary to be paid in tax and social security contributions.

Australia and India were tied in 14th place, with a tax rate of 29.1 per cent.

Mexico (8th), Brazil (9th) and Argentina (10th) led the American counties.

European countries - other than Russia - dominated the ranks of countries with the least attractive tax regimes.

Ireland was 18th, Spain 19th, Switzerland 21st, France 22nd and Germany 29th.

At the bottom were Hungary (30th), Denmark (31st) and Belgium (32nd), where single managers would have to pay tax and social security contributions of 48.5 per cent, 48.6 per cent and 50.5 per cent respectively.

Senior consultant Brian Waite said going to countries with low or zero tax rates was an important incentive for employees to work abroad.
In high-tax destinations, expatriate employees had to get compensation packages that would at least match their purchasing power at home.

Mercer researcher Niklaus Kobel said marital status was often a major factor in determining local tax rates.
In Hong Kong, a married manager with no children would pay 11.5 per cent in tax - lower than the rate for a single person - and a married person with two children would be taxed at only 8.9 per cent.

(Source: smh)

Income tax - what you pay in Australia

Tax is a highly complex issue and needs to be worked out on an individual basis. Income tax can be structured in various ways for employees in Australia.

While it is possible to 'pay as you go' with tax, you still have to submit a tax return at the end of the financial year, which falls on 30 June. It is advisable to use the services of an accountant to do this.

If you start your employment as a salaried worker, visit an accountant to find the best tax set-up for you. There are two kinds of qualified accountant in Australia: the certified practising accountant or CPA, or chartered accountant. There is little difference between the two, but make sure your accountant has either qualification.

For basic information on tax rates, fringe benefits tax - which affects employment benefits like company cars and business expenses - superannuation and family tax benefits visit the Australian Tax Office website.

If you will be paid a salary you can work out your weekly, fortnightly or monthly tax deductions in the tax calculation section of the website.

The amount of tax you pay also depends on your visa status. If you are a foreign resident, use this table as a guide.

Foreign resident tax rates
A guide to the amount of tax you pay...
Weekly earnings Weekly rate
A$0 - $383 29 cents for $1 earnings
$383 - $960 $111 plus 30 cents for each $1 of earnings over $383
$961 - $1,152 $242 plus 42 cents for each $1 of earnings over $960
$1,153 and over $365 plus 47 cents for each $1 of earnings over $1,153

If you are an Australian resident, the individual income tax rates for 2006-07 are:

Taxable income Tax on this income
$0 – $6,000 Nil
$6,001 – $25,000 15c for each $1 over $6,000
$25,001 – $75,000 $2,850 plus 30c for each $1 over $25,000
$75,001 – $150,000 $17,850 plus 40c for each $1 over $75,000
Over $150,000 $47,850 plus 45c for each $1 over $150,000

To own a business in Australia (2) - register a company

A company is a separate legal entity and is registered with ASIC – Australian Security and Investment Commission. This form can be used to register a company in Australia.

The major differences between a company and a business:

1. A company name can be used Australia-wide once it is registered. It is registered with federal government. A business name is registered with state government and only effective in one state – you have to register with each state authority if you want to use a business name nationally.

2. A company is a legal entity. A business is not but the proprietor(s) must be a legal entity or legal entities. – In most case, shareholders of a company will only have limited liabilities (limited by their share) but individual business owners may have unlimited liabilities to a business.

3. Different tax rate. Income tax rate for a company is flat – 30% at the moment. Income tax rate for a sole-trader business is same as the rate for an individual which is from 0, 15% to 47% progressively. The rates will vary each year.

4. The application fee for a company is around $400 and an annual return fee of $220 is applied each year. The application fee for a business name is $137 for a three-year period and then a renewal fee is applied for every three years.

5. Only a company can use “Pty Ltd” or “Ltd” in the end of the name.