Whether you have graduated at the top of your class in an MBA program or whether you are a self-educated entrepreneur, starting a business in a given country requires a lot of learning about the nuances of its taxation law requirements. Nobody is born with a complete understanding of tax rules and regulations. But, if you want to ensure that your business complies with the law of the land and that you can continue to operate without penalties, it is important to know the basics of the taxes you are required to pay.
In Australia, there are numerous taxes that employers need to consider. Let’s look at some specific points to consider if you want to understand taxation law requirements as a new business owner.
Goods And Services Taxes
One of the biggest headaches for new business owners is understanding how to calculate GST. The goods and services tax in Australia is a broad-based tax that is added to most goods and services sold in the country. The current rate of this tax is set at ten per cent.
You will need to include GST in the goods and services that you sell unless your business only sells items that are specifically posted on the exemptions list. You can find this list on the Australian Taxation Office website. As part of your reporting with the ATO, you will also need to claim GST credits for the GST that is included in the prices of items that you buy for your business.
According to taxation law, businesses need to start charging GST when their annual turnover exceeds $75,000. Taxi-related businesses will need to charge GST with any amount of annual turnover. As a new business, therefore, GST may not yet apply to you. But it is important to verify this with the ATO first.
Once you know you need to add GST to your prices, you will need to register your business for GST with the ATO. This can be done online, over the phone, or through a registered tax agent.
Australian businesses are also required to pay income taxes. The amount that you are required to pay each year will depend on your annual taxable income. This is determined by taking your assessable income, which includes gross before-tax income, and subtracting any deductions from this amount. Income taxes are filed with an income tax return every year, even if you do not expect to pay any tax.
Other Australian Business Taxes
There are other taxes that apply to businesses in Australia. The capital gains tax must be paid if your business has made money from the sale of any of its assets. This is included in your Australian income tax payments.
Payroll taxes will vary from state to state. These taxes are based on the number of wages and salaries that you pay to your employees.
Land taxes are paid in some cases if you own property. The amount of this tax that you will be required to pay will depend on the total value of your properties.
Finally, a fringe benefits tax may be applied if you provide benefits to your employees and their families.
Moving Forward Without Stress
Trying to understand the tax code in all of its nuances and details can quickly start to feel overwhelming. However, it is reassuring to know that there is both accounting software and professional accountants out there, who can help you to keep track of these details while avoiding mistakes and penalties.
The points outlined here will help you understand some of the most important business tax categories in Australia. However, there is much more to learn. Be patient and go slowly through the Australian Taxation Office website to learn more.