I was recently asked by the Institute of Chartered Accountants in Scotland about weird taxes in Australia… And here was my response
The seafarer’s tax offset
This little present by the previous Labor government to the Maritime Union allows those who employ seafarers a 30% tax offset for the salaries they pay. The rationale for the introduction of this tax offset was to “stimulate opportunities for Australian seafarers to be employed on overseas voyages and to gain maritime skills”. Since its introduction, it has been claimed by fewer than five taxpayers. Right now there is a bill before the Senate to repeal it. But it will get blocked as in Australia you can’t even take away handouts that no one uses.
The reason we have tax concessions that encourage people to salary packaged cars is because back in 1986, when Australia introduced a fringe benefits tax to tax benefits provided to employees by their employers, it was too difficult to track car expenses. Also, Government wanted to continue to encourage the thriving Australian car manufacturing industry. We still salary-package cars today when it’s a piece of cake to track car expenses, and the car manufacturing industry in Australia is almost gone and will definitely be gone by 2017. So we are spending $800 million a year to fund an industry that hardly exists today and will not exist in 2017.
Queen bee levy
Australia has over 125 different taxes, and some of these taxes are as ridiculous as the queen bee levy. Up until recently, if you sold a queen bee for over $20 you had to arrange a 10 cent payment to the Government. A really big money earner for the Government!
Aussie alcohol taxation
Unlike many countries that use volumetric taxation, where you tax the product based on how much alcohol is in it, Australia has a unique system where it taxes beverages based on how “Aussie” they are. Australians like drinking beer so beer is taxed substantially less than spirits, at almost half the rate. But for some reason Brandy is taxed substantially less than other spirits – I never knew Brandy was an Aussie favourite! Probably remembering the colonial days.
While it is on its way out in April next year, right now doctors at public hospitals can use the tax system to effectively pay for half of their kids’ weddings. There is no tax on entertainment benefits that public hospitals give to their staff. Therefore, a doctor just asks their employer to reimburse them the cost of their kids wedding (which is entertainment) and says that the employer can reduce their pre tax salary by the same amount. The employer pays the doctor the same amount as they would have if the doctor had not salary packaged the wedding, and doctor gets to pay for the wedding out of pre tax salary. So now we know why doctors families have the most expensive weddings!
For technology’s sake
Small businesses can give staff several electronic devices, like a phone, tablet and a laptop, in a signal year, as is often the case when a new employees starts, without paying any Fringe Benefits Tax. But don’t think about doing this if you are a medium or large business! As these devices have “substantially similar functions”, the tax system says that if these medium and large businesses provide more than one of these to an employee each year there should be FBT payable. Welcome to your new employer. Would you prefer to have either a phone or a computer to read your emails for your first year, because for tax purpose we can’t afford to give you both… Quite 1980’s.