Talking Cents

What You Need to Know About the Australian Tax System

As a small business owner in Sydney or Zetland, it’s important to have a good understanding of the Australian tax system. Taxation is an integral part of running a business, and the penalties for not complying with tax laws can be severe. In this article, we’ll cover some key things you need to know about the Australian tax system, specifically as it pertains to small business accounting in Sydney and Zetland.

1.    Business Structures and Taxation

The first thing to consider is the business structure you’ve chosen for your company. Different structures have different tax implications. For example, if you’re running a sole trader business, your business income is taxed as personal income. This means you’ll pay tax at the same rates as an individual taxpayer. If you’re operating as a company, your profits will be taxed at the company tax rate, which is currently set at 30%.

2.    GST

Goods and Services Tax (GST) is a kind of tax that applies to most goods and services sold in Australia. If your business has an annual turnover of $75,000 or more, you must register for GST. Once registered, you need to charge GST on your sales and remit this to the Australian Taxation Office (ATO). You can also claim back GST on purchases made for your business. GST is currently set at 10%.

3.    Business Activity Statements

Business Activity Statements (BAS) are used to report and pay GST and other taxes to the ATO. If your business is registered for GST, you’ll need to lodge a BAS every quarter. BAS also includes PAYG withholding, which is the tax you need to withhold from your employees’ pay and remit to the ATO. BAS can be lodged online through the ATO’s Business Portal 

4.    Fringe Benefits Tax

If you offer benefits to your staff outside of their salary or wages, such as a company car or private health insurance, you may be liable for Fringe Benefits Tax (FBT). FBT is estimated based on the taxable value of the benefit received and is a separate tax from income. The current FBT rate is 47%.

5.    Superannuation

Superannuation is the Australian equivalent of a retirement savings plan. As an employer, you’re required to make superannuation contributions on behalf of your employees. This is called the Superannuation Guarantee (SG). The current SG rate is 10%, but it’s scheduled to increase to 12% by 2025. It’s important to keep up with your superannuation obligations, as failure to do so can result in penalties.

6.    Tax Deductions

There are a range of tax deductions available to small businesses in Australia. These include deductions for expenses such as rent, utilities, and office supplies. It’s important to keep accurate records of your expenses so that you can claim the deductions you’re entitled to. 

7.    Record Keeping

Keeping precise records is crucial for small business accounting in Sydney and Zetland. This includes keeping receipts and invoices for all business transactions, as well as maintaining records of your income and expenses. It’s also important to keep records of your BAS lodgments, employee superannuation contributions, and other tax obligations. 

It's crucial to have a good understanding of the Australian tax system if you run a small business in Sydney or Zetland. The taxes that apply to your firm, such as GST, PAYG withholding, FBT, and superannuation, are also something you should be aware of. Maintaining correct records of your business transactions and claiming the tax deductions you are entitled to are equally crucial.

Consider M.A.S. Partners For Your Small Business Accounting Needs:

If you need help with your small business accounting in Sydney or Zetland, it’s a good idea to engage the services of a qualified accountant who can help you through the complications of the tax system and ensure that your business is compliant with all tax laws and regulations.

In addition to our core accounting services, we also offer a range of value-added services to help you grow and succeed in your business. This includes financial analysis and reporting, business advisory services, and strategic planning. Click here to know more.