Businesses in Australia are required to deal with the goods and services tax (GST) in various ways — from charging customers 10% and paying the Tax Office the tax collected, to claiming GST on purchases.
Pay as you go (PAYG) instalments is a system for making regular payments towards your expected annual income tax liability. It only applies to you if you earn business and/or investment income over a certain amount.
It’s safe to say Australia has a penchant for small business.
Around 90% of Australian businesses are small to medium-sized entities (SMEs). Taxes on small business are lower than they’ve been in the last decade. It’s one of our healthiest and fastest growing sectors.
With the Uber-GST stoush mostly settled, the Tax Office has offered an olive branch to another high-profile disruptive economy -crowdfunding – in the form of provisional tax guidance that promises things will change if they need to.
Historically the Tax Office’s stance on crowdfunding has been narrow but definitive. Late last year, the regulator said crowdfunding activities would likely incur GST liabilities if they involved exchanging goods for donations. It’s common that ‘promoters’ (the individuals asking for donations) offer ‘funders’ prizes for their contributions and the Tax Office saw that occurrence as a taxable consideration. That applied only to goods, though.
When the Single Touch Payroll initiative was first floated at the end of 2014, it was touted as a tool that would eliminate several red-tape producing processes and do away with the need for many reporting demands presently dumped on small business owners.
It is called “single touch” because the interactive online tool is intended to fulfil all business reporting obligations (payment summaries, superannuation contributions, pay-as-you-go withholding and so on) “at the touch of a single button” the government announcement said.
The Tax Office warns that it is working closely with AusIndustry to identify taxpayers involved in aggressive R&D Tax Incentive arrangements.
The ATO says some claims made for the R&D incentive have been negligent on the compliance requirements generally expected when making a claim, with some other instances even bordering on tax avoidance and fraud.
Our post-budget wrap up looked at many of the announcements affecting small business with the “Growing Jobs and Small Business” package announced by the government on budget night. You can read more about the small business concessions at business.gov.au.
Now the legislation that many small business owners will be glad to see in place has made it through Parliament.
It’s something of a little white lie, isn’t it? — the one told to aspiring small business owners and entrepreneurs that hard work guarantees success.
Hard work is vital, but it’s not the only quotient.
In an unprecedented first for small business tax compliance, the Tax Office has revealed it will chase up incorrectly disclosed income and match it to credit card and debit card records throughout the 2014-15 financial year.
As part of the blitz, the Tax Office will ask major Australian financial institutions for the online purchase details of around 90,000 business-owning taxpayers.
The small business sector has been described as the engine room of the economy as well as the biggest employer in the country.
Tasmania has nearly 40,000 businesses across a range of sectors, across the state, and over 95 per cent of these are small businesses. (Department of State Growth)