Income Tax Accounting

Instructor: Maqbool Kader Quraishi

Section: 02
Project: Differences tax rates between
Bangladesh and Australia
Submitted by-Group Venus

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 Name ID
SYED WAFI HAIDER 1310897

MD. SHIFATULLAH 1310658

SALEH AHMED 1320666

MD REZWAN 1321506

AYRIN ABEDIN 1330214

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 Table of content

Topic Page no

Introduction 4

Tax classification 4

Sources of income 5

Difference type of tax 6

Bangladesh income tax structure 7-10

Australia income tax structure 11-13

Bangladesh corporate tax 14-18

Australia corporate tax 19-21

Australia other taxes 22

Conclusion 23

References 24

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 Introduction
Taxation means by which governments finance their expenditure by imposing
charges on citizens and corporate entities, normally governments collect taxes so
that there is a pot of money to spend on things that benefit society as a whole. This
might be law enforcement, including the police and courts, infrastructure, like
roads and pathways, and administration. Bangladesh and Australia Government
also uses tax to fund various public services, including healthcare and welfare
benefits

Tax Classifications
Direct tax
Definition A direct tax is a form of tax is
collected directly by the
government from the persons
who bear the tax burden. Taxable
individuals file tax returns
directly to the government
Examples Direct taxes are corporate taxes,
income taxes, and transfer taxes.
Indirect tax
An indirect tax is a form of tax
collected by mediators who transfer
the taxes to the government, and
also perform functions associated
with filing tax returns. The
customers bear the final tax burden
Indirect taxes are sales tax and
value added tax (VAT).

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Sources of Income in Bangladesh:
For the purpose of computation of total income and charging tax thereon, sources
of income can be classified into 7 categories, which are as follows:

Salaries

Interest on securities

Income from house property

Income from agriculture

Income from business or profession

Capital gains

Income from other sources.

Sources of Income in Australia:

Personal income taxes

Capital gains tax
Corporate taxes
Trustee liability taxes
Goods and Services taxes
Property taxes
Departure tax
Excise taxes (Fuel taxes in Australia, Luxury Car Tax)
Customs duties
Payroll taxes
Fringe Benefits Tax
Inheritance tax
Superannuation taxes

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 Different types of taxes in Bangladesh
and Australia are as follow
Type Country
Income tax Both Income taxes from the main sources of revenue for
funding the different activities of the government,
especially the federal government
Payroll taxes Both Payroll taxes are imposed by the state government.

Property Taxes Both States governments depend largely on property taxes for
carrying out different activities. Property taxes from
commercial complexes, industrial houses and residential
complexes fund the state governments
Excise tax Australia Excise taxes are levied by the federal government on
petrol, cigarettes, alcohol. These are referred to as in
elastic goods.
Tax on Australia Among different types of tax is also included, the
Inheritance inheritance tax
Goods and Both This tax is usually levied on individuals who have
Services taxes registered for Goods And Services Tax. Supplies like
exports, food products, medical services, services
related to education are free from paying the
services tax

Corporate Taxes Both Corporate as well as companies are required to pay tax
to the federal government for profits earned
Superannuation Australia Superannuation is a pension program in Australia. In
taxes this a superannuation fund is formed by contributions
from the employer. The employer saves a part of the
employees' salary into the fund. After retirement the
fund is collected and made available to the employee
along with additional incentives, which the employee is
entitled to get for keeping the money with the employer
Value added tax Both VAT is a tax on manufacturing that taxes the difference
between the cost of raw materials and the cost of the
final product.

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 Bangladesh Income tax structure
For individuals other than female taxpayers, senior taxpayers of 65 years and
above, retarded taxpayers and gazette war-wounded freedom fighter, income tax is
payable for the

On first 2,50,000 NIL

On next 4,00,000 10%

On next 5,00,000 15%

On next 6,00,000 20%

On next 30,00,000 25%

On balance amount 30%

For female taxpayers, senior taxpayers of age 65 years and above, income tax is
payable for the

On first 3,00,000 NIL

On next 4,00,000 10%

On next 5,00,000 15%

On next 6,00,000 20%

On next 30,00,000 25%

On balance amount 30%

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 Income from interest on securities

Government Securities Commercial securities

Taxable Gov. security Debentures

5% TDS 5% TDS

Fully taxable Fully taxable

Admissible expenses are Admissible expenses are

deducted deducted

Grossing up is required if net Grossing up is required if net

interest amount is given interest amount is given

No grossing up required if No grossing up required if

investment is given investment is given

Tax-exempt government securities and Zero Coupon Bond

No TDS

No Admissible Exempted

Fully exempted

Income from agricultural

Reduced tax rates for certain agricultural income

Income Tax rate

On first TK 10lac 3%
Next TK 20lac 10%
For the rest on the amount 15%

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 Reduced tax rate for poultry

Income Tax rate

On first TK 15lac NIL
Next TK 15lac 5%
For the rest on the amount 10%

Income Asset

Surcharge is an additional tax payable over and above the income tax.

Net wealth amount Rate of surcharge

Up-to TK 2.25Crore NIL

More than TK 2.25crore but less than TK 10Crore 10%

More than TK 10crore but less than TK 20Crore 25%

More than TK 20crore but less than TK 30Crore 20%

More than TK 30crore 25%

Other Taxes rates for Bangladeshi Citizens

For retarded taxpayers, tax free income threshold limit is TK 3, 75,000

For freedom fighters, tax free income threshold limit is TK 4, 25,000

Minimum tax for any individual assesses living in Dhaka and Chittagong
City corporation area us TK 5,000

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 Minimum tax for any individual assesses living in other City corporation
area is TK 4,000

Minimum tax for any individual assesses living in other areas is TK

3,000

Non- Resident individual 30% ( Other than non -resident Bangladeshi )

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 Australia Income tax structure
Resident personal tax rates (01/07/2015-30/06/2016)

Taxable income $ BD Rate Marginal

rate

On first $18,200 TK 10,95,659.28 NIL

On next $18,201-$37,000 TK 10,95,719.48-22,27,439.20 19%

On next $37,001-$80,000 TK 22, 27,499.4-48, 16,084.75. 32.5%

On next $80,001-$1,80,000 TK 48,16,144.95-10,836,190.69 37%

Excess over $1,80,000 TK 10,836,190.69 45%

Tax rate for minors unearned income

Income BD rate Marginal

rate

On first $0-$416 TK 25,043.63 NIL

On next $417-$1,307 TK 25,103.84-78,682.78 66%

Excess over income taxed at ( adult) marginal rates

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 Medicare levy
2.0% of taxable income not applicable to:

Non-Resident

Individual taxpayers where taxable income is under the threshold amount

$20,896 (TK 12,57,961.34)

Married taxpayers where family income is under the family income

threshold-$44,076+$3,238 (TK-28, 48,352.92). Dependent child/student

Individual taxpayers eligible for SAPTO where taxable income is under

$33,044 (TK-19,89,283.81)

Married taxpayer eligible for SAPTO where family income is under

$57,500+$3,238 (TK-36, 56,491.94). Dependent child/student

Medicare Levy Surcharge

Taxable income BD TAKA Taxable BD TAKA Surcharge

(single) income
(Family )

1 $90,001-1,05,000 TK TK TK 1%
54,18,155.54- 1,80,001- 1,08,36,250.89-
63,21,111.23 2,10,000 1,26,42,222.47

2 1,05,001- TK 2,10,001- TK 1.25%

1,40,000 63,21,171.43- 2,80,000 1,26,42,282.67-
84,28,148.31 1,68,56,296.62

3 Over 1,40,000 TK Over TK 1.5%

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 84,28,148.31 280000 1,68,56,296.62

Income Tax analysis between Bangladesh and Australia

Both the Bangladesh and Australia impose income taxes. However, the two
countries calculate them differently. Bangladesh and Australia both country tax
structures are separate from each other. Both country taxes starting from
difference income structure, In Bangladesh for individual income tax starting
from 2,50,000 which marginal rate is NIL, on the other side In Australia it
started from Australian dollar $18,200 (BDT rate 10,95,659.28 ) which
marginal rate is NIL. Personal Income Tax Rate in Bangladesh was last
registered at 30 Percent in 2015. Australia Personal Income Tax Rate rose to 47
Percent in 2016 from 45 Percent in 2015.

So here difference between incomes starting for tax both country BDT rates
(10, 95,659.28-2,50,000 = 845659.28) totally separated.

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 Bangladesh Corporate tax structure
In Bangladesh, the Corporate Income tax rate is a tax collected from companies.
Its amount is based on the net income companies obtain while exercising their
business activity, normally during one business year. The benchmark we use
refers to the highest rate for Corporate Income. Revenues from the Corporate
Tax Rate are an important source of income for the government of Bangladesh

CORPORATE TAX RATE- 1

COMPANY 2015-16

Publicly Traded Company 25%

Publicly traded Co. declaring at least 30% dividend 25%

Publicly traded Co. declaring less than 10% dividend 25%

Non-publicly traded company 35%

Bank, Insurance & Financial Institute: 40.00%

Listed & 4th Generation Banks and FIs

Bank, Insurance & Financial Institute: 42.50%

No -Listed & 4th Generation Banks and FIs

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 CORPORATE TAX RATE- 2

Company 2015-16

Merchant Bank 37.50%

Cigarette: Non Publicly Traded 45%

Publicly Traded

Cellular Phone: Non Publicly Traded 45%

Cellular Phone: Publicly Traded 40%

Minimum Tax payable on gross turnover 30%

(10% in first three years)

Income from dividend 20%

Capital gain arising from transfer of capital assets 15%

other than tocks and shares of any company
registered

Income from business or profession

Under IRO 1984 some deduction are allowed up to a certain limit as follow

Entertainment expenses (Rule-65)

Income profit and gain of the business Allowable rate

and profession

On first TK 10 Lack 4%

On the balance 2%

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 Free sample distribution (Rule-65C)

Ceiling of turnover Pharmaceutical Other industries

industries

Up to TK 5Crore 2% 1.50%

Above TK 5Crore to 1% 0.75%

10Crore

Above TK 10Crore 0.55% 0.375%

Capital Gain

In the case of a company -

1. Tax payable on the total income excluding capital gain as per

applicable rate

2. Tax as the rate of 15% on the whole amount of such capital gain.

In the case of a person other than a company

1. On disposal of capital assets within 5 years of acquisition the amount

of capital gain will be included with total income and taxed
accordingly at regular rate.

2. On disposal of capital asset after 5 year of acquisition tax payable on

the capital gain at the rate applicable to his total income included the
said capital gain or tax at the rate of 15% on the capital gains
whichever is lower.

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 Tax Rebate for investment:

Rate of Rebate: Amount of allowable investment is - actual investment or 30%

of total income or Tk. 1, 50, 00,000 whichever is less. Tax rebate amounts to
15% of allowable investment.

Types of investment qualified for the tax rebate are :-

1. Life insurance premium up to 10% of the face value.

2. Contribution to Provident Fund to which Provident Fund Act, 1925

applies.

3. Self contribution and employer's contribution to Recognized Provident

Fund.

4. Contribution to Supper Annuation Fund.

5. Contribution up to TK 60,000 to deposit pension scheme sponsored by

any scheduled bank or a financial institution.

6. Investment in approved debenture or debenture stock, Stocks or Shares

Contribution to Benevolent Fund and Group Insurance premium

7. Contribution to Zakat Fund

8. Donation to charitable hospital approved by National Board of Revenue

Donation to philanthropic or educational institution approved by the
Government

9. Donation to socioeconomic or cultural development institution

established in Bangladesh by Aga Khan Development Network

10.Donation to ICDDRB, Donation to philanthropic institution-CRP, Savar,

Dhaka Donation up to five lac to

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 Shishu Swasthya Foundation Hospital Mirpur, Shishu Hospital,
Jessore and Hospital for Sick Children, Sathkhira run by shishu
swasthya Foundation, Dhaka.

Diganta Memorial cancer Hospital, Dhaka,

The ENT and Head-Neck cancer Foundation of Bangladesh,

Dhaka and

Jatiya Prtibandhi Unnayan Foundation, Mirpur, Dhaka;

11.Donation to Dhaka Ahsania Mission Cancer Hospital

12.Donation to Sylhet Diabetic Samity, Islamia Eye Hospital and MA

Ispahani Institute of Opthalmology, Kidney Foundation and National
Heart Foundation of Bangladesh

13.Donation to Asiatic society of Bangladesh Donation to Muktijudha

Jadughar

14.Donation to National level institution set up in memory of liberation war;

15.Donation to National level institution set up in memory of Father of the

Nation Any investment by an individual in Bangladesh Government
Treasury Bond;

16.Investment in purchase of one computer or one laptop by an individual

assessee.

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 Australia Corporate tax structure
An Australian resident company is subject to company tax, at a rate set by the
Australian Government. A non-resident company is taxed on its Australian source
income at the same rate as a resident company. Taxable income and the tax rate
may vary under limited circumstances, such as industry or business structure.

Company Rate%

Small business 28.5%

Large business 30%

Life insurance companies

Ordinary class of taxable income 30%

Complying super class of taxable income 15%

Additional tax on no- TFN (Tax file number) Contributions 34%

income where the company is a retirement saving account
(RSA) provider

Pooled development funds (PDFs)

Small and medium sized enterprises income component 15%

Unregulated investment component 25%

Other 30%

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 Credit unions

Small credit unions under $50,000 small 28.5%

business entities

Medium credit unions $50,000 to $149,999 42.75

Large credit unions $150,000 and over 28.5

Small credit unions are taxed on all their taxable income, but note the treatment of
mutual interest. Interest derived by small credit unions is exempt from tax if all of
the following apply:
The credit union is an approved credit union
The interest is paid to the credit union by its non-company members in
respect of loans it made to those members.
Credit unions with a notional taxable income of at least $50,000 but less than
$150,000 are taxed on their taxable income above $49,999.
Credit unions with a notional taxable income of $150,000 or more are taxed on all
of their taxable income.
A credit union's notional taxable income is defined in subsection 6H (5) of ITAA
1936.

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 Non-profit companies

Taxable income BDT rate Rate %

$0$416 TK 0-25,467.89 Nil

$417$915 TK 25,529.12-56,017.12 55%

$916 and above TK 56,078.35 and above 30%

Non-profit companies that are small business entities

Taxable income BDT rate Rate %

$0$416 TK 0-467.89 Nil

$417$863 TK 25,529.12-52,833.64 55%

$864 and above TK 52,894.86 above 28.5%

Analysis between Bangladesh and Australia Corporate

Tax Structure.
Bangladesh corporate tax structure and Australia corporate tax structure totally
difference from each other. There are no similarities between both country
corporate tax structures.

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 AUSTRALIA OTHER TAXES INFORMATION

Private company loans

Benchmark interest rate for 2015-20165.45%
Research and Development Tax Incentive
Refundable R &D tax offset- 45%
Non-refundable R & D tax offset-40%
Petroleum Resources Rent Tax (PRRT)
PRRT rate- 40%
Payroll tax rates and thresholds

State Rate% Annual threshold BDT Taka

New South Wales 5.45% 750,000 44,250,197.20

Australia Capital 6.85% 1,850,000 1,09,150,486.42

territory

Victoria 4.85% 550,000 32,450,144.61

Queen land 4.75% 1,100,000 64,900,289.22

Tasmania 6.1% 1,250,000 73,750,328.66

South Australia 4.95% 600,000 35,400,157.76

Western Australia 5.5% 800,000 47,200,210.34

Northern territory 5.5% 1,500,000 88,500,394.39

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 CONCLUSION

Tax revenue is to GDP is very negligible, despite the government is trying to

maximize its tax revenue through different method. But the government should
also remind the cannon of convenience while collecting tax from assesses. As we
are living in a civilized society - should come forward to pay taxes to government
in order to conduct the administrative, defense and development activities of the
country. Otherwise we would not be able to prove ourselves as civilized people.
Tax is the most important in the hand of the government to control the economy as
well as the inflection. It also helps in push money to the economy, develop certain
source of the economy and control some other activities of the economy. No
Government can run its and perform administration works without collecting tax
as a source of revenue. So, the Government imposes tax over the company and the
corporations. On the other hand Government can also intensive to the infant and
certain basic industry for protection through its tax policy.

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 Resources

1. Bangladesh Income tax 9th edition (Nikhil Chandra Shil)

2. http://www.asiatradehub.com/bangladesh/tax.asp
3. http://www.economywatch.com/tax/australia/different-types.html
4. https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/profes
sional-resources/financial-planning/tax-and-social-security-guide-2015-
16.pdf?la=en
5. https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/profes
sional-resources/financial-planning/tax-and-social-security-guide-2015-
16.pdf?la=en
6. http://www.nbr.gov.bd/contents/publication/107.pdf
7. https://www.ato.gov.au/rates/company-tax/?page=2#Tax_rates_2015_16

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