Different business structures pay taxes in different ways. There are many taxes that may affect a business. The main ones are; goods and services tax, income tax, pay as you go withholding tax for employees, payroll tax and excise tax.
Other taxes that a business could encounter are; fringe benefits, capital gains, property, vehicle and other duties and levies administered by state or local governments.
Once your business is registered for the relevant taxes, you will report and pay several of these as part of the monthly or quarterly activity statement.
You will pay some business taxes directly to the state revenue office, such as; land tax for property purchases and payroll tax once you reach the state threshold of reportable wages. Other common government duties include stamp duty on property transfers and land tax.
Calculate income tax after the end of the financial year, taking into account any PAYG instalments already paid. Tax deductions for business expenses reduce your taxable income and, therefore, your tax bill. You can make financial gain on the disposal of assets, such as property or shares. In this case, you pay capital gains on the amount of financial gain and pay it as part of income tax. Income tax for business is calculated differently according to the type of entity.
Your tax agent can make sure you are claiming all the small business tax benefits that you are allowed through concessions that reduce the amount of tax liability. For example, there are specific concessions for asset write-off, primary producers, fringe benefits or start-up expenses. Concessions also apply in some situations to reduce the amount of capital gains tax payable.
Talk to us about adding or cancelling tax registrations, concessions, and planning for the various taxes your business will need to manage.
For more on our ‘Understanding the Basics’ series, see:
Understanding the Basics: Capital Gains Tax
Understanding the Basics: Personal Income Tax