With numerous tax obligations, understanding how much tax your business must pay is crucial for compliance and financial planning. The Australian Taxation Office is vital in regulating these taxes to ensure every business meets its responsibilities. A clear understanding of your tax obligations not only helps you avoid fines but also streamlines your financial operations. By contacting one of the best accounting firms in Melbourne like us, you can be sure that your business will stay compliant with these regulations.
Types of Taxation for Small Businesses
As a small business owner, you may be liable to pay different types of taxes. Australian Taxation Office is a revenue collection agency and is responsible for handling tax matters at the federal level, while certain taxes are state-based. Here are some taxes that your business is liable to pay:
- Income tax for business
Income tax must be at the top of the list as this applies to all businesses. One can choose between four types of business structures if one wants to run a business. Every business structure has unique tax implications.
- Capital Gains Tax (CGT)
Capital gains tax applies where there is capital gain arising from disposing of or selling a business asset. It makes a part of your income tax. When you stop being an owner of the asset, the CGT event may be triggered. This is when you must report capital gains and capital losses in your income tax return. If you find it difficult to manage CGT matters for your company, it would be better to consider contacting a tax accountant. When searching for a ‘tax accountant near me’, ensure to check if they have worked in your niche.
Fringe Benefits Tax (FBT)
Fringe benefits tax applies to fringe benefits and is not included in the income tax. Fringe benefits are benefits provided to your staff. It is essential for businesses. It is legal to provide fringe benefits, but you have to meet your FBT obligations.
- Pay As You Go Withholding
Under Pay As You Go Withholding, you must withhold tax from payments made to others. It includes payments:
- to company directors, employees, and office holders
- to workers under labour-hire agreements
- under voluntary agreements
- Where an ABN has not been quoted in concern with supply.
- Pay As You Go Instalments
Pay As You Go Instalments is an arrangement where you pay income tax in instalments when your investment or business income surpasses the threshold. The threshold varies for different business structures.
Goods and Services Tax (GST)
The goods and services tax (GST) is a value-added tax applied to most goods, services, and other items that are sold or consumed. It has a standard rate of 10%, with some exemptions for specific food, healthcare, and housing items. Businesses must register for GST if their annual turnover exceeds or is projected to exceed $75,000. Additionally, businesses can choose to register for GST voluntarily.
- Fuel Tax Credits
You are liable to claim a fuel tax credit for fuel used for business operations. The claim could be for fuel use in equipment, plant, machinery, heavy vehicles above 4.5 tonnes and light vehicles on private roads. Your business must be registered for GST to claim the fuel tax credit. To claim credits, make sure to record everything, and for record-keeping, you can consider contacting a bookkeeper for small businesses.
- Wine Equalisation Tax (WET)
If you prepare and import wine into Australia or sell it wholesale, you must consider wine equalisation tax. The rate of WET is 29% of wholesale value and is payable if your business is registered for GST.
- Luxury Car Tax (LCT)
Luxury Car Tax is a tax payable on the import or sell of luxury cars, and the cars with LCT value above the LCT threshold attract an LCT rate of 33%.
Conclusion
The blog highlights important types of taxes for all businesses in Australia. If you are running a business in Australia, you must be aware of these types of taxes that you may be eligible for. If you find it difficult to handle tax matters, you can consider getting in touch with Reliable Melbourne Accountants.