Appendix B - Overview of the Commonwealth taxation system

Overview of the Commonwealth taxation system

The purpose of this section is to provide an overview of the Commonwealth taxation system, as well as on the collection of tax by revenue head.

Commonwealth taxation breakdown by revenue head

For the financial year ending 30 June 2003, the Commonwealth Government collected a total of $163,055 million¹in total tax revenue from taxpayers. This figure does not include an amount of $30,699 million² in Goods and Services Tax (GSR) revenue, as the GST is administered by the Commonwealth on behalf of the States and, as such, is treated as a State tax for budgetary purposes.

Table 1: Commonwealth taxes (2002-03 Final Budget Outcome)³

Commonwealth taxes (accruals)	$m	Per cent of C’wth taxes
Income tax
Individuals and other withholding4
Gross income tax withholding	84,640	51.9
Gross other individuals	18,314	11.2
less: Refunds	11,651	7.1
Companies	33,365	20.5
Superannuation funds
Contributions and earnings	3,617	2.2
Superannuation surcharge	1,279	0.8
Petroleum resource rent tax	1,715	1.1
Total income tax	131,278	80.5
Indirect tax5
Excise duty
Petroleum products and other fuel products and crude oil	13,337	8.2
Other excise	7,450	4.6
Customs duty	5,573	3.4
Other indirect taxes	896	0.5
Total indirect tax	27,225	16.7
Fringe benefits tax	2,832	1.7
Agricultural levies and other taxes	1,690	1.0
Total Commonwealth taxes	163,055	100.06

Table 1 shows that the major components of Commonwealth taxation revenue in 2002-03 were taxes on income (80.5 per cent of total taxation revenue), indirect taxes (16.7 per cent of total taxation revenue), fringe benefit tax (FBT) and other taxes (2.7 per cent of total taxation revenue)⁷.

Chart 1: Commonwealth revenue collection by percentage

Chart 1 shows that income tax from individuals and companies was the major source of income tax revenue, with excise making up most of the Commonwealth indirect tax revenue. That is, 56 per cent from individuals (including the Medicare Levy), 21.6 per cent from companies (including petroleum resource rent tax) and 12.8 per cent from petroleum and other excises.

Historical overview of Commonwealth government taxes and revenue collection

Table 2 (below) provides a historical overview of taxation instruments introduced in Australia since 1800, ranging from the introduction of the first import duties through to the replacement of the Diesel Fuel Rebate Scheme and the Diesel & Alternative Fuel Grant Scheme with the Energy Grants (Credits) Scheme in July 2003.

Table 2 also provides an overview of Commonwealth Total Tax Cash Receipts from 1990-91 through to 2003-04, both as a total receipts cash figure and as a percentage of Gross Domestic Product (GDP).

Table 2: Historical Information

History of tax instruments	Date
First import duties	1800
Introduction of excise on spirits	1819
Excise and customs duties become preserve of Commonwealth under the Constitution	1901
Introduction of Commonwealth income tax	1915
Excise on petroleum and shale oil products (except diesel)	1927
Sales tax (set at 2.5 per cent)	1930
Income taxes ceded by States to the Commonwealth	1941
Introduction of PAYE tax system	1944-45
Excise on diesel	1957
Commonwealth passes payroll tax to the States	1971
Introduction of Diesel Fuel Rebate Scheme (DFRS)	1982
Introduction of CPI indexation of excise	Aug 1983
Introduction of petroleum resources rent tax	1987
Introduction of FBT	Sept 1985
Introduction of CGT	Sept 1985
Full imputation for company tax	July 1987
Gold mining tax exemption abolished	Jan 1991
Replacement of State BFFs with Commonwealth excise surcharge	Aug 1997
Introduction of CGT discount, abolition of indexation & averaging	Sept 1999
Introduction of tobacco per-stick excise arrangements	Nov 1999
Abolition of wholesales sales tax	July 2000
Introduction of GST	July 2000
Adjustment of fuel and alcohol excise rates for GST	July 2000
Introduction of Diesel and Alternative Fuel Grant Scheme (DAFGS)	July 2000
Abolition of fuel indexation	Mar 2001
Abolition of FID	July 2001
Abolition of stamp duty on share transactions	July 2001
Introduction of consolidation regime	July 2002
Introduction of National Excise Scheme for Low Alcohol Beer	July 2002
Replacement of DFRS & DAFGS with Energy Grants (Credits) Scheme	July 2003

Source: Smith, Julie P., (1993), Taxing Popularity: The Story of Taxation in Australia, Budget Documents.

Table 3: Commonwealth total tax cash receipts

	$m	Per cent of GDP
1990-91	93,225	23.4
1991-92	87,970	21.6
1992-93	89,434	21.0
1993-94	94,024	21.0
1994-95	105,687	22.4
1995-96	116,386	23.1
1996-97	125,815	23.7
1997-98	132,219	23.6
1998-99	141,104	23.8
1999-00	150,695	24.0
2000-01	146,056	21.8
2001-02	147,544	20.7
2002-03	160,661	21.4
2003-04(a)	164,849	20.7

(a) Estimate.

Note: Figures up to and including 1998-99 are based on the old Commonwealth Budget Sector cash accounting framework. Figures from 1999-00 are on a Commonwealth general government GFS (cash) basis.

Source: Budget Paper No. 1, Budget Strategy and Outlook 2003-04, Statement 5; 2002-03 Final Budget Outcome, Table C2.

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¹ The 2002-03 Final Budget Outcome, Table 2, p 3.

² The 2002-03 Final Budget Outcome, Note 15, p 50.

³ The 2002-3 Final Budget Outcome, Table 2.

⁴ Inclusive of the Medicare levy.

⁵ Does not include $30,699 million in GST revenue, paragraph 2 refers.

⁶ Percentages may not add to 100 as a result of rounding.

⁷ Note: Quoted percentages may not add to 100 as a result of rounding.

 

Next: Appendix C - Overview of the Tax Administration System

 

© Commonwealth of Australia 2003