Taxation

"Death, taxes and childbirth! There's never any convenient time for any of them." Margaret Mitchell, Gone With the Wind (1936)

If you are operating a business in Australia, you are responsible for complying with various ATO requirements. To meet these requirements you may need to apply for certain registrations, report income and business expenses, and keep business records. It is also important that you understand which business expenses you can claim, and you might even be eligible for some tax concessions.

Having a good understanding of basic tax issues will allow you to legitimately minimise your tax bill and avoid penalties that may be imposed if you fail to meet these requirements.

However, if you sell goods produced as a result of private recreational pursuits or a hobby (such as occasionally selling artworks or crafts), the income earned is generally not taxed, but you are not entitled to claim tax deductions for any expenses or offset any loss against other income.

Tax and your business structure

Your tax obligations, compliance with ATO requirements and calculating the correct amount of tax payable will differ depending on your business structure.

The ATO requirements for each business structure whether it be a sole trader, partnership, company, or trust are different, so it's important that you do your research. Read more …

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Tax registrations

The registrations required by the ATO for your business will vary depending on your business structure and operations. The four most common registrations required by small businesses are as follows:

  • tax file number ( TFN );
  • Australian business number ( ABN );
  • goods and services tax (GST); and
  • pay as you go (PAYG) withholding. Read more …

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Other tax obligations

Other tax obligations that apply to your business may include:

  • PAYG instalment;
  • superannuation;
  • fringe benefits tax (FBT);
  • luxury car tax (LCT);
  • wine equalisation tax (WET); and
  • payroll tax. Read more …

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Reporting tax obligations

Businesses registered for GST use a business activity statement (BAS) to report and pay their tax obligations including GST, PAYG instalments, PAYG withholding, FBT, fuel tax credits, WET and LCT. The ATO will send you a BAS form personalised according to the registrations you have lodged. The business activity statement allows you to "net off" your tax obligations, allowing a single payment or refund for each reporting period.

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Record keeping obligations

Small businesses are required to keep records and documents for tax purposes in relation to their business operations. Read more …

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Tax deductions and concessions

You can claim tax deductions for expenses incurred in running your business, provided the expenses are directly related to earning assessable income and not of a private, domestic or capital nature. To claim the expense, you must have actually paid for the good or service, or be committed to the expenditure. Read more …

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Advice and information

Taxation is a complex issue, and there is no best solution to suit all individual circumstances. It is strongly recommended that you obtain professional advice from your accountant, financial advisor or registered tax agent tailored to your particular personal and financial circumstances.

The ATO offers free tax support to help you manage your tax so you can get on with running your business:

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What's next…

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