It’s been said that the only guarantees in life are death and taxes. So if you start up a business in Australia, you should be aware of the applicable tax laws that apply, so you can stay in compliance. Pay the right amount, paying them on time, and being aware of all applicable exemptions can save you a small fortune. Here is some need-to-know info about business taxation in Australia:
1. You must register for a Tax File Number (TFN)
The TFN is a unique number that the Australian Taxation Office (ATO) issues to taxpayers, such as businesses. This allows you to manage various government services, such as taxes. The type of TFN that you should secure will depend on the structure of your business. A company, partnership, and trust require their own TFN. Meanwhile, sold traders utilize their individual TFN in official dealings with the ATO.
2. Know about the various types of taxes that you might be required to pay
Your business is unable to pay taxes it doesn’t know about, but remember that “ignorance of the law is no excuse.” The types of taxes that your business is required to pay will depend on various issues, such as the type of business you’re running. Here are some of the main ones you might need to pay:
Capital Gains Tax (CGT): Capital gains are earned when you earn a profit by selling assets for a higher price than you paid for them. CGT is actually part of your company’s income tax.
Goods and Services Tax (GST): A brad-based tax that is 10% on the majority of goods and services that are sold or purchased in Australia. This tax applies the majority of Australian businesses, so it’s quite probable that it will affect yours.
Income Tax: This tax is paid by both businesses and individuals in Australia. You are required to submit a tax return for every year you operate a business. It’s calculated on “assessable income,” minus any valid deductions. “Assessable income” is generally income earned by your particular business. Deductions allowed are for particular expenses paid that are related to your business.
International Tax: This is a tax that is payable on international income.
Payroll Tax: This is a state tax that is paid on the wages that employers pay their employees. It’s calculated how the wages on the monthly wages to pay out, and collected in every state/territory where your staff members are located. You are only required to pay this tax if your total wages in Australia are greater than the exemption threshold in your state/territory.
3. You can pay your taxes electronically by using various services
However, you’ll need AUSkey to avail of the services. When you have AUSkey you can avail of several online services of the Australian government. For example, you pay your taxes electronically by using BPAY. You have the options of direct debit and credit. If you feel more comfortable using more traditional methods, you can mail your payments using snail mail, or sending it via an Australian Post Office.
4. If your company has 19 or fewer employees, remember SuperStream
A small business in Australia is classified as one that contains 19 or fewer employees. Starting July 1, 2015, employers owning small businesses will be required to make electronic super contributions under the SuperStream standard. It’s important to consider all of your options regard it, and be prepared for the new policies that will be implemented on July 1.
Meanwhile, since July 1, 2014, employers of medium or large business were able to use the SuperStream standard. If you haven’t, you have until July 1 to start using it.