Accounting & Taxation
Tax time can be stressful for businesses, especially if your documentation is in disarray. Add the frequent changes in tax regulations and the special features of your business to the mix, and you might be facing penalties for not meeting your tax commitments.
For individuals, personal tax returns can also be challenging, especially for migrants who are new to the Australian tax system.
At Fortiz Accountants, we make tax time easy. By listening and providing timely advice, we strive to deliver the best outcome for you and your business.
The business activity statement (BAS) is a tax reporting requirement for businesses issued by ATO on either a monthly or quarterly basis.
It is used for reporting and paying goods and services tax (GST), pay as you go (PAYG) instalments, PAYG withholding tax and other tax obligations.
The due date for lodging and paying is displayed on your business activity statement (BAS). If the due date is on a weekend or public holiday, you can lodge your form and pay on the next business day.
GST Registration
If your GST turnover is below the 75,000, registering for GST is optional.
If you have not registered for GST, and you become aware that your GST turnover will exceed the $75 000 per year threshold, you will have to register for GST within 21 days.
It is a good idea to check each month to ensure you’re not likely to go over the limit. Keeping an eye on your GST turnover is important so you can register if necessary.
What does GST Registration Mean for You?
If you are registered for GST, you are entitled to claim input tax credits for the GST paid on items you have bought for business use. If you are not registered, you cannot claim input tax credits.
You will have to collect GST from your customers and pay it to the Australian Taxation Office (ATO) when it is due. This is one-eleventh of the sale price.
If you operate your business as a company, the company is required to lodge a company tax return.
In addition, the company may also have to complete the following schedules:
- Losses schedule
- Capital gains tax (CGT) schedule
- International dealings schedule
- Research and development tax incentive schedule
- Dividend and interest schedule
- Franking account tax return
Tax Deductions
Tax deductions may be claimed for most costs incurred in running your business. However, there are exceptions, such as, private or domestic expenses, entertainment, fines, etc.
Tax Concessions
There are a number of tax concessions available to small business entities (SBE).
- Simplified Depreciation Rules
- Income Tax Concessions
- Capital Gains Tax (CGT) Concessions & Rollover Relief
- Excise Concessions
- Goods & Services Tax (GST) Concessions
- Pay As You Go (PAYG) Instalment Concessions
- Fringe Benefits Tax (FBT) Concessions
Sole traders are required to lodge the following:
- Tax return for individuals
- Tax return for individuals (supplementary section)
- Business and professional items schedule for individuals
Your net taxable income or loss from running a business must be reported in your tax return, even if it’s below the taxable income threshold of $18K.
This includes:
- Assessable business income minus any deductions for business expenses
- Any other assessable income, such as salary and wages, dividends and rental income, minus any allowable deductions against this income.
Your Personal Tax
Australian tax laws are not simple, which is why Australians engage tax accountants to prepare their tax returns. It helps, too, that the fees paid to your accountant are tax deductible in the year that they are paid!
Tax Deductions
Individuals are entitled to claim deductions for expenses if they were incurred and are directly related to earning income.
Some of these deductions include motor vehicle & travel expenses, laundry & drycleaning expenses, donations, home office expenses, self education expenses, tools & equipment, books, periodicals, premiums paid for income protection insurance, interest charged by ATO, fees paid to attend seminars, conferences & workshops, union fees, subscriptions to professional associations, etc.
Tax Offsets & Rebates
There are also a number of tax offsets available, such as, Beneficiary Tax Offset, Dependent Offset, Private Health Insurance Rebate, Seniors and Pensioners Tax Offset, Mature Age Worker Tax Offset, Australian Superannuation Income Stream Tax Offset, Superannuation Contributions on Behalf of Spouse Tax Offset, Low Income Offset, Zones Tax Offset and Overseas Forces Tax Offset.
Income
To add to the complexity, all income must be declared, including foreign-sourced income.
Taxable income includes employment income, investment income, interest income, capital gains, business, partnership & trust income, foreign-sourced income, etc.
Profits or returns you make on your investments usually become part of your income for tax purposes.
Australian residents for tax purposes are taxed on their income worldwide, so whether you have investments in Australia or overseas, there are tax implications in acquiring, owning and disposing of them.
Income from investments, both local & foreign, can include:
- Interest from bank accounts & income bonds
- Dividends from shares
- Rental income from investment property
In addition, capital gains taxes may be payable if you make a profit upon the sale of your investment.
Tax Deductions
Various tax deductions are available, depending on the type of investment. Some examples are listed below.
- Bank accounts and income bonds: bank fees
- Shares / managed funds: management fees, loan interest, etc.
- Property: interest, insurance, repairs, maintenances, council rates, water rates, land taxes, property management fees, advertising fees, depreciation, body corporate fees, etc.
Tax Offsets
If you receive foreign income that is taxable in Australia and you paid foreign tax on that income, you may be entitled to an Australian foreign income tax offset.
If you operate your business as a partnership, the partnership lodges a partnership tax return, and as one of the partners, you lodge an individual tax return.
The partnership does not pay income tax on the income it earns. Instead, you and each of your partners pay tax on the share of net partnership income you each receive.
The partnership reports its net income on a partnership tax return. This includes the partnership’s assessable income less allowable expenses and deductions.
As an individual partner, you report the following on your individual tax return:
- Your share of any partnership net income or loss
- Any other assessable income, such as salary and wages, dividends and rental income.
Don’t panic about your late or overdue tax returns. But don’t sit on it or ignore ATO reminders either.
We can help you to get up to date with your late or overdue tax return!
Contact us to arrange for an appointment for a confidential consultation in person at either of our offices during business hours.
Alternatively, if you are not able to come in to see us, we are happy to communicate via phone or email.
We work with you, for you, to make it all simple for you!
Owners Corporations (OC) are treated as public companies for tax purposes. This means that an owners corporation must lodge a tax return for any year in which it receives assessable income.
Assessable Income for OC
- Assessable income includes:
- Income from leasing common property
- Interest from investments
- Fees for issuing owners corporations certificates and copies of the register and records
- Sale or rentals of common property or personal property
- Fees for servicing lots
It does not Include
- Annual fees, including contributions to any maintenance fund
- Special fees and charges, as these are ‘mutual income’.
OC Tax Return
An OC must:
- Have a tax file number if it earns one dollar or more of assessable income.
- Lodge its annual income tax return every 30 June. Unlike personal income tax, there is no tax-free threshold. All of an owners corporation’s assessable income will be taxed at the company tax rate.
An owners corporation without assessable income must inform ATO that it has no taxable income for the year.
Income from Common Property
If an owners corporation has earned income from common property, it must notify each lot owner of their portion of the assessable income by 14 July. This amount should be included in lot owners’ personal tax returns.
Similarly, if an owners corporation has made a capital gain or a capital loss from a transaction in respect of all or part of the common property, the gain or loss is not included in the tax return for the body corporate. Each proprietor or unit owner must include their share of the capital gain or loss in their own tax return based on their proportion of the lot entitlements.
Contact us today to find out how we can assist with the preparation and lodgement of owners corporation (OC) tax returns.
Self Managed Superannuation Funds (SMSF) must complete Annual Returns.
SMSFs are subject to different regulatory complaiance and audit requirements to your standard business or individual tax return. The SMSF annual return is more than an income tax return. It has 11 sections and must be completed in its entirety, and lodged with the SMSF auditor details.
- A - SMSF information: Complete this section for the SMSF; provide general and identifying information about the SMSF and its auditor.
- B - Income: Complete this section if the SMSF has assessable income to report.
- C - Deductions and non-deductible expenses: Complete this section for the SMSF; report all the SMSF's expenses, both deductible and non-deductible.
- D - Income tax calculation statement: Complete this section for the SMSF to calculate the amount due or refundable to the SMSF.
- E - Losses: Complete this section if the SMSF has tax or capital losses to carry forward to later income years.
- F&G - Member information and Supplementary member information: Complete either section F or section G (or both) for the SMSF. Report contributions and account balances for each of the SMSF's members: in section F, for those who had an account on 30 June 2020 in section G, for those who left the SMSF during 2019–20.
- H - Assets and liabilities: Complete this section for the SMSF. Report all of the SMSF's assets and liabilities at 30 June 2020.
- I - Taxation of financial arrangements: Complete this section if the taxation of financial arrangements provisions apply to the SMSF.
- J - Other information: Complete this section if the SMSF has made or is making a family trust election or an interposed entity election.
- K - Declarations: Complete this section for the SMSF. Declare that you have met your obligations in relation to the SMSF annual return.
As SMSFs assess their own tax debt or refund, a notice of assessment will not be issued. The lodgment of the return is deemed to be an assessment.
If you operate a business as a trust, or own investment properties via a family trust,
- The trust lodges a tax return, and
- The beneficiaries lodge individual tax returns
The income and deductions available to a trust are the same as those for businesses/companies.
Besides the trust tax return, the following may also have to be lodged:
- International Dealings Schedule
- Losses Schedule
- Capital Gains Taxes (CGT) Schedule
Did you know?
- The Australian Transaction Reports and Analysis Centre (AUSTRAC) analyses and disseminates financial intelligence to its government partner agencies and certain international counterparts to assist in the investigation and prosecution of serious criminal activity, including terrorism financing, organised crime and tax evasion.
- The Australian Government has committed to a new global standard on the automatic exchange of financial account information. This requires financial institutions around the world to collect tax residency information from their customers.
- The tax laws authorise the ATO to impose administrative penalties for conduct such as, making a false or misleading statement or taking an unarguable position, failing to lodge a return or statement on time, failing to withhold amounts as required under the PAYG withholding system or failing to meet other tax obligations.