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Norfolk Island Brought Under Aus Tax System

by Mary Swire,, Hong Kong

04 March 2016

The Australian Parliament has passed legislation to extend the Australian tax system to Norfolk Island.

The Tax Laws Amendment (Norfolk Island CGT Exemption) Bill passed on March 3.

Assistant Treasurer Kelly O'Dwyer said: "The Government is delivering on another election commitment by delivering taxation, social security, and healthcare arrangements to Norfolk Island. These amendments will enable Norfolk Island residents to access a broad range of Australian Government programs helping them to improve vital infrastructure and other community assets.

"In addition, Norfolk Islanders will transition into the mainstream tax system with Norfolk Island residents beginning to pay Australian taxes when these changes come into effect on July 1, 2016."

From July 1, Norfolk Island resident individuals, companies, and trustees will be taxed on their Norfolk Island sourced income and their foreign sourced income, and be liable to pay the Medicare Levy. Norfolk Island employers and employees will gradually be brought into Australia's superannuation guarantee system.

The goods and services tax (GST) will not be introduced, as Norfolk Island is an Australian external territory and is not part of Australia for GST purposes. Capital gains tax (CGT) will only apply to assets acquired by Norfolk Island residents after October 24, 2015. This is due to difficulties that residents may face in obtaining records, O'Dwyer said.

TAGS: individuals | capital gains tax (CGT) | tax | employees | goods and services tax (GST) | Australia | legislation | social security | Norfolk Island | individual income tax | services

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