Page 19 - ebook

do you need advice on income?
Assessable income includes all gross income (sales) from your everyday business activities such as sales of goods and services, and also includes other income such as interest on bank accounts, investment income and capital gains. The amount of income tax your business pays is calculated on taxable income, which is your assessable income less any deductible expenses.
If you are an individual taxpayer or sole trader, assessable income also includes any income earnt through salary and wages and allowances from working and other sources of income. It is vital that you understand your entitlement to claim deductible expenses, maximising these wherever possible.
Have you recently sold an asset?
When you sell or otherwise dispose of a capital asset it is considered a capital gains tax (CGT) event and for most CGT events, you need to work out your capital gain or loss. Your capital gain is the difference between your capital proceeds and the cost base of your CGT asset. The cost base is calculated as what you paid for the asset, together with any other costs associated with acquiring, holding and disposing of it such as stamp duty. The capital gain is treated as taxable income in the tax year in which the asset is contracted to be sold.
Individuals and trusts receive a 50% discount on capital gains realised on assets owned for more than 12 months, effectively only paying tax on half of the realised capital gain. Companies are not entitled to any capital gains tax discount. There are exemptions for assets such as your main residence, this ensures that any capital gain made on the sale of your home is not included in your taxable income.
There are also concessions available for business assets such as when you sell your business which can reduce any taxable gain to nil in some circumstances. This is a complex area of taxation law and there are many concessions and rules that may be applicable to your specific circumstances, please contact us to discuss further.
do you have a business with employees?
Employers must comply with PAYG Withholding Tax, Workers Compensation and Superannuation obligations as well as ensuring employees are paid at the correct rate and accrue any entitlements. Superannuation obligations and payments are reported electronically through a system called ‘Super Stream’ and payments are due by the 28th day of the month after the end of the quarter ie June quarter superannuation obligation would be due by 28 July.
Depending on the level of wages paid, employers may also need to comply with Payroll Tax obligations, which is a state tax on the wages paid to employees. Payroll Tax is payable if your total Australian wages exceed the exemption threshold that applies to your state or territory.
It is important to be aware that ‘non-cash’ benefits provided to employees, their family or associates fall under Fringe Benefits Tax rules. These benefits can include vehicles used for private use, housing, gym memberships and tickets to events.
Fringe Benefits Tax is calculated on the taxable value of the benefits provided and if your business provides these benefits to employees, you must register for FBT with the ATO, calculate your obligation and lodge an annual return. There are exemptions available for certain benefits provided to employees such as private use on commercial vehicles, laptops and private use of work mobile phones (subject to limits).
do you have questions around goods and services tax?
GST is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia. A business must be registered for GST if any of the below apply:
• Your business has a GST turnover (gross income minus GST) of $75,000 or more per annum
• Youexpectyourturnovertoreachthe$75,000GSTthresholdinthe first year of operation
• YouarealreadyinbusinessandhavereachedtheGSTthreshold
• Your non-profit organisation has a GST turnover of $150,000 per year or more
• Whenyouprovidetaxiorlimousinetravelforpassengersregardless of your GST turnover
• Ifyouwanttoclaimfueltaxcreditsforyourbusiness
Once you are registered for GST, you need to issue tax invoices to your customers with GST, collect, report and pay the GST amounts to the ATO on your activity statements. You can also claim GST credits from the ATO for GST paid on business expenses incurred or assets purchased.
If you have questions relating to accounting or tax, please contact Christina Gulliver, Partner at Brentnalls SA on (08) 8241 8444.
Christina Gulliver
Partner
Brentnalls SA
Ph: 8241 8444
17
Taxable income, capital gains tax, fringe benefits & gst