COMPANY A company is a distinct legal entity with its own income tax liability so a Company Tax Return must be completed for each company. A company’s income tax is calculated as a percentage of the taxable income the company earned during the financial year.
PARTNERSHIP A partnership running a business must complete a Partnership Tax Return to show all income earned and deductions claimed for expenses during the course of the business and how the profit or loss was shared between the partners. Each partner pays tax on their share of the partnership’s income so they must include their individual share of the net partnership profit or loss in their personal tax return.
SOLE TRADER Sole traders are not required to complete a separate return for their business. They use their personal income tax return to report their business income and deductions.
Medicare Levy- The Medicare Levy is a tax Australian residents pay to cover health care charges. It is payable on taxable income, in addition to income tax.
Small Business Entity Concessions:- Small businesses with an annual turnover of less than $2 million may qualify for a range of tax concessions. If your business is eligible you can use the concessions that suit you. You may have to satisfy additional conditions and will need to check whether you qualify for the concessions each tax year. The concessions are available for income tax, capital gains tax, fringe benefit tax, GST, PAYG Installments
The Australian Business Number (ABN) provides a single identifier when dealing with the tax office or other government departments and agencies. To qualify for an ABN, you must be a company registered under Corporations Law in Australia or a business entity carrying on an enterprise in Australia
GST Registration:– Your GST turnover is $75, 000 or more If You are a nonprofit organisation with a GST turnover of $150, 000 or more
Fringe Benefit Tax (FBT)
Fringe Benefit Tax is a tax paid on certain benefits provided by the employer to its employees or the employees associates in place of salary or wages. For details regarding FBT please click here
Capital Gain Tax (CGT)
Capital gains tax (CGT) is the tax you pay on a capital gain. It is not a separate tax, but part of your income tax. The most usual way to make a capital gain or loss is to sell assets like real estate, shares or managed fund investments
If you are an individual, some assets may be exempt from CGT, including:
- Your main residence
- Your car, motorcycle or similar vehicle.
- Assets for personal use that you acquired for $10,000 or less.
There are other exemptions, rollovers, and concessions that may allow you to ignore, defer or reduce your capital gain or capital loss. In some situations using the indexation and discount methods to calculate your capital gain can also reduce this.
RESIDENTS AND NONRESIDENTS
If you are an Australian resident, CGT applies to your assets anywhere in the world. For foreign residents, CGT applies to taxable Australian property. For more details please see the Capital gains tax section on the ATO website.