Accounting

Standards in
Australia

Reporting standards
TheAustralian

Accounting
Standards Board(AASB) is
anAustralianGovernment agencythat
develops and maintainsfinancial
reportingstandards applicable to
entities in the private and public sectors
of theAustralian economy.

Reporting standards
Also,

the AASB contributes to the

development of global financial
reporting standards and facilitates the
participation of the Australian
community in global standard setting.
The AASBs functions and powers are
set out in theAustralian Securities and
Investments Commission Act 2001.

Reporting standards
The

AASB makes Australian Accounting Standards,

including Interpretations, to be applied by:
(a) entities required by theCorporations Act
2001to prepare financial reports;
(b) governments in preparing financial
statements for the whole of government and the
General Government Sector (GGS); and
(c) entities in the private or public for-profit or
not-for-profit sectors that are reporting entities or
that prepare general purpose financial statements.

Reporting standards

AASB 1053Application of Tiers of Australian

Accounting Standardsestablishes a
differential reporting framework consisting
of two tiers of reporting requirements for
preparing general purpose financial
statements:
(a) Tier 1: Australian Accounting Standards;
and
(b) Tier 2: Australian Accounting Standards
Reduced Disclosure Requirements.

Reporting standards
Tier 1 requirements incorporate International Financial Reporting
Standards (IFRSs), including Interpretations, issued by
theInternational Accounting Standards Board(IASB), with the
addition of paragraphs on the applicability of each Standard in the
Australian environment.
Publicly accountable (defined in AASB 1053) for-profit private sector
entities are required to adopt Tier 1 requirements, and therefore are
required to comply with IFRSs. Furthermore, other for-profit private
sector entities complying with Tier 1 requirements will
simultaneously comply with IFRSs. Some other entities complying
with Tier 1 requirements will also simultaneously comply with IFRSs.
Tier 2 requirements comprise the recognition, measurement and
presentation requirements of Tier 1 but substantially reduced
disclosure requirements in comparison with Tier 1.

Reporting standards
Australian

Accounting Standards also include

requirements that are specific to Australian
entities.
These requirements may be located in Australian
Accounting Standards that incorporate IFRSs or
in other Australian Accounting Standards.
In most instances, these requirements are either
restricted to the not-for-profit or public sectors or
include additional disclosures that address
domestic, regulatory or other issues.

Reporting standards

These requirements do not prevent publicly

accountable for-profit private sector entities
from complying with IFRSs. In developing
requirements for public sector entities, the
AASB considers the requirements of
International Public Sector Accounting
Standards (IPSASs), as issued by the
International Public Sector Accounting
Standards Board (IPSASB) of
theInternational Federation of Accountants.

Standard application

Under the AustralianCorporations Act 2001,

many entities are required to apply
Australian Accounting Standards when
preparing their financial statements. Some
public sector entities are required to apply
Australian Accounting Standards under
either Commonwealth, state or territory
legislation, through specific instructions to
preparers or reporting frameworks that set
out guidelines or regulations.

Standard application
Members

ofCPA Australia, theInstitute of

Chartered Accountants in Australiaand
theInstitute of Public Accountantshave a
professional obligation to take all
reasonable steps within their power to
ensure that entities with which they are
involved comply with Australian
Accounting Standards when preparing
their general purpose financial statements.

Adopted standards
Since

2002, the AASB implemented the

broad strategic direction from the
Australian Financial Reporting Council
(FRC) to adoptInternational Accounting
Standards Board(IASB) standards for
financial reporting periods beginning on
or after 1 January 2005.

Taxation in Australia

Taxation in Australia
It

is true that Australia is one of the

highest taxing countries on Earth, and it
is important that if you are migrating to
Australia that you fully understand the
taxation system before you arrive.

Taxation in Australia
If

you become a resident of Australia, or you stay for

at least six continuous months in a year, then you will
be taxed on all income that you earn in Australia as
well as income that you earn overseas. This means
that once you immigrate to Australia and you still hold
bank accounts in the UK, then the UK income will be
taxed in Australia. It will then need to be included in
your Australian income tax return.
An Australian resident is taxed on all sources of
income whether they are earned in Australia or not.
You will get a tax credit for tax already paid in the UK
on this income.

Taxation in Australia
Once

you arrive in Australia, you will be

required to apply for an Australian Tax
File Number (TFN).
You need an Australian Tax File Number
to open up bank accounts, for
employment and to file an income tax
return.

Goods and Services Tax

(GST)
Australia

also has a Goods and Services

Tax (GST). The current rate is 10%. It is
a very complex tax. You must be aware
that if you establish a business, whether
self-employed or through a company or
trust, you must register for GST if you
expect your gross sales to be more than
$50,000 in a year.

How Much Will I be Taxed?

The Australian taxation system is based on a
tiered structure, that is the more you earn, the
more you will be taxed. There is a tax-free
threshold of $6,000, which you can earn under
and effectively not pay any tax at all. The
highest rate of tax is 47% if your taxable income
is over $62,500 in the year. There is also the
Medicare Levy of 1.5%. This is compulsory and
must be paid at the time of lodging your income
tax return and receiving an assessment.

Company Income
Taxation

Company income taxation is levied at a rate of

30 per cent on all taxable income earned by
companies, including incorporated and
unincorporated associations, limited
partnerships and some corporate unit trusts and
public trading trusts. Special tax rates apply to
pooled development funds and to certain
classes of taxable income of life insurance
companies, credit unions, non-profit companies
and retirement savings account providers.

Other Taxes
Petroleum

resource rent tax (PRRT) is

levied at a rate of 40 per cent on
taxable profit in respect of offshore
petroleum projects other than some of
the North-West Shelf production areas,
which are subject to excise (included in
excise on petroleum and other fuel
products) and royalties.