If you run a business, you must know what you should include in your business’s assessable income.
Business’s assessable income
When you calculate a business’s assessable income, include:
- All gross income before tax from your everyday activities performed in a business, including income from sales, sales made over the internet, and foreign income.
- All other business income that is related to your everyday business activities, including:
- changes in the value of trading stock
- assessable government payments
- capital gains
- Isolated transactions that are likely to make a profit
- Cash prizes for your business.
Many of you may not be aware of what you should include in your business’s assessable income. That’s where tax accountants come in. They are experts in dealing with all tax matters, making it easy for you to stay compliant. You can also consider getting in touch with a tax agent near your company by searching online for ‘tax accountant for small business near me’. Make sure they have expertise in dealing with this type of tax matter.
Cash and cash equivalent income
If your business receives cash payments for services or goods, you need to declare them as assessable income. This includes:
- Business earned income through vouchers, coupons, or gift cards
- All your cash earnings
- Gratuities or tips, subscription payments, and fees your business earned
- Your business income is deposited into a private credit card or a mortgage
- Dividends and bank interest
Non-cash income and barter transactions
You may receive services, goods, or other products in return for services, goods, or other products you provide as part of your business. This is known as a barter transaction. You may also receive gratuities or tips or something similar. If you receive tips, gratuities, goods, services, or other benefits, as full or part payment for services or goods you provide, their market value is included as income in your tax return.
To keep track of non-cash income and barter transactions, you can engage a trusted tax accountant. If you are searching for ‘tax accountants near me’, make sure to check their qualifications and experience.
Money or other considerations in barter transactions
A specific rule applies when calculating the amount to include in your assessable income for a barter transaction if you provide money (or another form of consideration) in addition to the main goods or services offered by your business.
In this situation, you must include the market value of the goods, services, or benefits you received, minus any additional payment or consideration you provided. This can occur, for example, when you obtain goods or services at a discounted rate under an agreement.
Crypto assets
Your business income may include:
- The market value of crypto assets (including cryptocurrencies) that you dispose of in the normal course of your business.
- The Australian dollar value of crypto assets you receive as payment for goods or services provided through your business.
Government payments
The Australian Government and state or territory governments offer various grants and payments to help businesses affected by natural disasters or tough times.
Most of these payments count as assessable income, so you must include them in your tax return.
Examples include:
- Fuel tax credits or product stewardship (oil) benefits
- Wine equalisation tax producer rebates
- Excise refund schemes for alcohol manufacturers
- Grants, such as those from the Australian Apprenticeships Incentives Program
- Business subsidies
- Payments from government entities for services or grants received (these are reported to the ATO under the taxable payments reporting system).
If you are paying taxes, you may also want to claim potential tax deductions. When it comes to tax deductions, you must have accurate records to support the claim. For accurate record-keeping, you can get help from a small business bookkeeper.
Capital gains and losses
You report capital losses and capital gains in your income tax return and pay tax on your net capital gains. Although it is called a capital gains tax, it is a part of your income tax. It is not a separate tax.
Conclusion
Now, you are aware of what you should include in your business’s assessable income. However, if you still have any queries, you can contact Reliable Melbourne Accountants.