The Australian Taxation Office (ATO) is responsible for collecting the relevant Income Tax and GST from the Taxpayers. Those of whom earn a salary or a wage will have their taxes deducted from their pay every pay run and have their net pay available to pay for their personal expenses.
Those that are self-employed will pay their taxes for both themselves and their employees, either monthly or quarterly via Instalment Activity Statements, and those that are registered for Goods and Services Tax (GST) will pay this tax at the same time.
The onus is on the tax payer to ensure they have paid the right amount of tax - any shortfall can attract interest and penalties.
In respect of the year ended 30 June 2011, the Federal Government had net tax collections of $288 Billion. Of this, $81.8 billion was from Goods & Services Tax. (Australian Bureau of statistics 2011 data).
So where does all the spending go?
The government spends these tax collections on the following:
- Social Security
- Commonwealth Services
- General Government & Services
- Industry & Workforce
Given the Global Financial Crisis (GFC) which hit economies around the world, Australia had to spend more than it collected in order to avoid a recession or minimise the effect of one. Long term deficits are not a favourable outcome for Governments as they are limited as to what they can do for the economy in the long run and hence, in this year’s budget, the Government is anticipating/planning on having the budget back in surplus by 2012/2013.
Where the government will be raising money from and where the spending cuts will occur, I will cover on after the budget is released on Tuesday 8th May 2012.