Tax Basics for Small Businesses

8/8/2019 Tax Basics for Small Businesses

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G or opo

Tax basics forsmall businessInormation abot yor ta obligations and entitlements.

NAT 1908-06.2008

For more inormationvisit www.ato.gov.au


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Our cOmmitment tO yOuWe are committed to roviding yo with advice and gidanceyo can rely on, so we make every eort to ensre that orblications are correct.

I yo ollow or gidance in this blication and it trns ot tobe incorrect, or it is misleading and yo make a mistake as areslt, we mst still aly the law correctly. I that means yoowe s money, we mst ask yo to ay it bt we will not chargeyo a enalty. Also, i yo acted reasonably and in good aith

we will not charge yo interest.I yo make an honest mistake in trying to ollow or advice andgidance in this blication and yo owe s money as a reslt,we will not charge yo a enalty. However, we will ask yo toay the money, and we may also charge yo interest.

I correcting the mistake means we owe yo money, we will ayit to yo. We will also ay yo any interest yo are entitled to.

Yo are rotected nder GST law i yo rely on any GST advicein this blication. I yo rely on this advice and it later changes,yo will not have to ay any etra GST or the eriod to thedate o the change.

I yo eel that this blication does not lly cover yor

circmstances, or yo are nsre how it alies to yo,yo can seek rther assistance rom s.

We reglarly revise or blications to take accont o anychanges to the law, so make sre that yo have the latestinormation. I yo are nsre, yo can check or a more recentversion on or website at www.ato.gov.au or contact s.

This blication was crrent at June 2008.

cOmmOnwealth O australia 2008

This work is coyright. Aart rom any se as ermitted nder the Copyright Act 1968,no art may be rerodced by any rocess withot rior written ermission rom theCommonwealth. Reqests and inqiries concerning rerodction and rights shold beaddressed to the Commonwealth Coyright Administration, Attorney-GeneralsDeartment, Robert Garran Oices, National Circit, Barton ACT 2600 or osted athttp://www.ag.gov.au/cca

Published by

Astralian Taation OiceCanberraJne 2008

JS 10161

abOut this GuideI yo oerate a small bsiness as a sole trader, artnershi,comany or trst, yo can se this gide to hel yo:

the services we oer when yo start yor bsiness

working ot i yo are oerating a bsiness

registering yor bsiness or ta roses

keeing roer records

calclating income ta

ta concessions or small bsiness

how GST worksthings to consider as an emloyer

yor ser obligations

yor ringe beneits ta obligations

activity statements

income ta retrns

aying yor ta

things to consider as yor bsiness grows

selling or ceasing yor bsiness.

For more inormation abot yor ta obligations as asmall bsiness oerator, reer to:

Record keeping for small business (NAT 3029)GST for small business (NAT 3014)

Home based business (NAT 10709)

PAYG withholding for small business (NAT 8075).

Throghot this gide yo will ind imortant notes (look orthe symbol) that will hel yo with key inormation yoshold note.

Yo will also ind more inormation boes (look or thesymbol) that will show any rther stes yo may need to takeor slementary inormation yo may need to reer to.


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CONTENTS

a quick tax Guide Or yOur business 4

01startinG yOur business 7

Have yo got the right advice? 7

Working ot i yo are a bsiness 7

02chOOsinG a business structure 9

Featres o dierent bsiness strctres 10

03reGisterinG yOur business Ortax PurPOses 14

Common bsiness ta registrations 14

Working ot i yo need a ta fle nmber 14

Working ot i yo need an Astralian Bsiness Nmber 14

Working ot i yo need to register or GST 15

Working ot i yo need to register or pAYG withholding 15

Other bsiness ta registrations 16

Changing yor registration details 17

Cancelling a registration 17

Non-ta bsiness registrations 17

Yor registration checklist 19

04keePinG GOOd recOrds 20

Legal reqirement 20

Keeing manal or electronic records 20

General records yo need to kee 21

Secial records yo may need to kee 21

Record keeing tis 22

05calculatinG incOme tax 23

Sel-assessment 23

Assessable income

Allowable dedctions

Taable income

Working ot how mch ta to ay 24

Making ayments towards yor ta liability 24

06claiminG deductiOns 28

What can yo claim? 28

What cant yo claim? 28

Working ot when to start claiming dedctions 29

Claiming motor vehicle eenses 29

Claiming working rom home eenses 30

What bsiness travel eenses can yo claim? 32

What dedctions can yo claim or decline in vale(dereciation)? 33

INCOME TAx AND DEDuCTIONS FOR SMALL BuSINESS 1


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2 TAx BASICS FOR SMALL BuSINESS

07tax cOncessiOns Or small business 34

General concessions 34

primary rodcers 34

Income averaging or secial roessionals 34

08makinG caPital Gains 36

09cOntractOrs and cOnsultants 37

personal services income 37

10OsettinG yOur business lOsses 38

Non-commercial loss rles 38

11hOw Gst wOrks 39

GST credits 39

GST sales and rchases 39

Secial GST rles 39

What is a ta invoice? 40

How do yo reort GST? 40

GST smmary 40

12emPlOyer essentials 41

Are yor workers emloyees or contractors? 41

Working ot yor pAYG withholding obligations 42

Volntary agreements

pAYG withholding what yo need to do or emloyees 42

Emloyment termination ayments 43

13 yOur suPerannuatiOn ObliGatiOns 45

What yo need to do 45

What to do i yo havent met yor ser obligations 46

14 yOur rinGe beneits tax ObliGatiOns 48

What are ringe benefts? 48

Yor FBT obligations

What yo need to do 48

15 activity statements

Lodging activity statements 50

When to lodge yor activity statement 50

What i yo cant ay 50

How to lodge yor activity statement 50

Activity statement tis

CONTENTS


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TAx BASICS FOR SMALL BuSINESS

16incOme tax returns 57

Lodging income ta retrns 57

When to lodge yor ta retrn 57

How to lodge yor ta retrn 57

17PayinG yOur tax 52

payment otions 52

paying rom overseas 52

What i yo cant ay right now? 53

Bdgeting to ay yor ta 53

18 yOur irst year in business 54

Is my bdget working? 54

19 as yOur business GrOws 55Is yor bsiness strctre still the most sitable oryor needs? 55

Do yo need additional ta registrations? 55

Does yor crrent attern o reorting GST sityor bsiness? 55

Is yor record keeing system working or yor bsiness? 55

Dealing with s online 55

Dealing with signifcant one-o transactions 55

20sellinG Or ceasinG yOur business 56

GST 56

Caital gains ta 56

deinitiOns 57

suPPOrt Or small business 58

Online services 58

Online ayment methods 58

Face-to-ace 58

phone 59

mOre inOrmatiOn 59

index 60

CONTENTS


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A QuICK TAx GuIDE FORYOuR BuSINESS

Obligation Do you need to apply or register? How do you apply or register?

Tax filenumber

Individals in bsiness se their individalta ile nmber.

partnershis, trsts and comanies need to alyor a searate ta ile nmber.

Yo can comlete and lodge an alication oran ABN and TFN or a comany, artnershi ortrst online at www.abr.gov.au

Individals cant aly or a ta ilenmber online.

Yo can also obtain ta ile nmber and ABNalication orms:

online at www.ato.gov.au or

by honing 13 28 66 or a aer alication.

Australianbusinessnumber (ABN)

I yo are in bsiness yo may register or an ABN.

Pay as yougo (PAYG)instalments(towards yourincome tax)

Yo dont need to register. Not alicable.

Goods andservices tax

(GST)

I yo are carrying on a bsiness (enterrise),yo mst register or and collect GST i:

yor annal trnover is $75,000 or more($150,000 or more i yo are a non-roitorganisation) or

yo are otherwise reqired to register.

Yo can still register i yor trnover is less than thisamont.

The ABN alication orm contains a sectionor registering or GST, wine eqalisation ta,lry car ta, pAYG withholding and ringebeneits ta.

I yo already have an ABN and need toregister or any o these other obligations, yocan do this:

online i yo already have a digital certiicate visit www.ato.gov.au/onlineservices or

by obtaining the ormAdd a new businessaccount (NAT 2954) online at www.ato.gov.auor

by honing 13 28 66.

Wineequalisationtax (WET) andluxury car tax(LCT)

Yo have to register only i:

yo are in the wine indstry and registered, orreqired to be registered, to collect GST or

yo sell lry cars.

PAYG

withholding

Yo mst register or pAYG withholding i yo make

ayments yo have to withhold rom, or eamle,ayments o salary or wages to emloyees.

Fringe benefitstax

Yo have to register or ringe beneits ta only i yorovide beneits to emloyees and have to ay ringebeneits ta.

Superannuationguarantee

Yo dont need to register, bt every qarter yo arereqired to ay a minimm level o serannation oreligible emloyees. This incldes directors and somecontractors yo engage). The minimm level is 9% oan emloyees earnings base.

Not alicable.

Fuel taxcredits

Yo may be able to claim el ta credits or elsed in yor bsiness. There are some ecetions.Yo will need to register or el ta credits and mstalso be registered or GST.

The ABN alication orm contains a section toregister or el ta credits. I yo already havean ABN, hone 13 72 26 anytime (atomatedservice have yor ABN and ta ile nmberready) or hone 13 28 66.


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What ongoing reporting responsibilities willyou have?

When do you lodge and pay (or claim a refund)? Seepage

Yo have to aly or a ta ile nmber only once.I yo carry on a bsiness, yo will be eected tolodge annal income ta retrns.

Not alicable. 14

An entity (sole trader, artnershi, comany ortrst) needs to aly or an ABN only once.

I yo carry on a bsiness, we will send yoactivity statements. Yo mst comlete and retrnthem by the de date.

Not alicable. 14

Ater yo lodge an income ta retrn, we will tellyo i yo need to make pAYG instalmentstowards yor income ta.

Yo reort instalments on yor activity statement and also have tolodge an annal income ta retrn. Yo reort and ay pAYGinstalments by the de date shown on yor activity statement.

Yo may have to make a balancing ayment when yo lodge yorannal income ta retrn, which is sally de by 31 October.

15 and 24

Bsinesses registered or GST need to lodge anactivity statement.

Yo reort and ay GST, and claim any GST credits, by the dedate shown on yor activity statement.

Most small bsinesses reort GST qarterly, bt some choose,or are reqired, to reort monthly. Others may be eligible toreort annally and ay by instalments, or reort and ayannally.

15 and 40

Yo reort any wine eqalisation ta and lrycar ta liabilities on yor activity statement.

Yo ay wine eqalisation ta and lry car ta by the de dateshown on yor activity statement.

16

Yo reort amonts withheld rom ayments on

yor activity statement.Yo also have to lodge an annal aymentsmmary statement.

Yo ay amonts withheld qarterly (smaller bsinesses)

or monthly, when yor activity statement is de.Yo may have to make a balancing ayment when yor annalPAYG payment summary statement is de by 14 Agst.

15 and 42

Yo may have to lodge an annal ringe beneits taretrn and may have to ay qarterly instalmentson yor activity statement.

Yo may have to ay qarterly instalments when yor activitystatement is de.

Yo may have to make a balancing ayment when yo lodgeyor ringe beneits ta retrn, which is de by 21 May.

16 and 48

I yo dont meet yor serannation obligationsyo will have to ay the serannation garanteecharge.

I yo have not met yor obligations in any qarter yo willneed to lodge a Superannuation guarantee charge statement quarterlyby the relevant de dates ollowing qarter (28 Nov,28 Feb, 28 May and 28 Ag).

45

Yo can claim el ta credits on yor bsinessactivity statement (BAS).

Yo shold lodge yor bsiness activity statement (BAS) by thede date shown on the orm.

16


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STARTING YOuR BuSINESS 01

have yOu GOt the riGht advice?Once yo have decided that yo want to start a bsiness, thereare a nmber o inormation sorces that can hel get yo o onthe right oot:

Talk to a inancial adviser or small bsiness advisory service

Each state has dierent organisations that can rovidesigniicant ree assistance. Ask yor local concil or stategovernment oice how to contact them, or look nder Smallbsiness in the hone book.

These organisations can hel yo lan yor bsiness and getaccess to the inancial sort yo need.

Talk to sccessl eole in a bsiness similar to yors. Whatwas their eerience when they started and what did they dothat made their bsiness a sccess?

Research what other rles or reglations will aly to yo.The internet is a great sorce o inormation i yo are looking tostart a bsiness. Check ot yor local, state or ederalgovernment websites.

Yo will ind sel inormation or bsiness atwww.business.gov.au, inclding:

bsiness strctresorming a comany

accessing inances

bsiness licences

comlying ser nds

ayroll ta, and

workers comensation.

wOrkinG Out i yOu are a businessI yo are in bsiness:

money earned rom the activity is generally assessable income

yo are generally entitled to dedct eenses incrred inearning this income, and

i the activity reslts in a loss, yo may be entitled to oset theloss against other income or carry it orward to oset againsttre income.

I yor activities are a hobby, the above oints do not aly.

w p?Yo will oten see the term enterprise, esecially in relation tothe ABN and GST. Basically, the term covers commercialactivities bt does not inclde hobbies or emloyment.Businesses are referred to as enterprises for GST andABN purposes, and so are the activities o charities andreligios instittions.

Carrying on a bsiness incldes anything done in the corse ostarting or ending the bsiness. Oten the date ocommencement is beore the bsiness starts to trade.

c o Some actors or indicators that corts and tribnals have takeninto accont in determining i a bsiness eists or ta rosesare listed below. While no one actor can be sed to work otwhether yo are carrying on a bsiness, taken together theyshold indicate whether yor activity is a bsiness.

Does yor activity have a signiicant commercial character? Itis imortant to consider whether yor activity is carried on orcommercial reasons and in a commercially viable manner.

Is there more than jst an intention to engage in bsiness?Yo need to have made a decision to commence bsinessand have done something abot it. I yo are still setting orrearing to go into bsiness, yo might not yet havecommenced bsiness.

Do yo have the rose o roit as well as the rosect oroit? Do yo intend to make a roit or geninely believe thatyo will make a roit, even i yo are nlikely to do so in theshort term?

Is there reetition and reglarity to yor activity? Bsinessessally reeat similar tyes o activities, althogh one-otransactions can constitte a bsiness in some cases.

Is yor bsiness similar to other bsinesses in yor indstry?Is the way yo oerate consistent with indstry norms orother bsinesses in yor indstry?

What is the size, scale or ermanency o yor activity?Is the size or scale o yor activity consistent with otherbsinesses in yor indstry? Is it sicient to allow yo tomake a sstainable roit?


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01 STARTING YOuR BuSINESS


Is yor activity lanned, organised and carried on in absiness-like manner?

This can be indicated by bsiness records and books oaccont, a searate bsiness bank accont, bsinessremises, licences or qaliications, and a registeredbsiness name.

examPle: cg o

Bill sells wooden toys rom a retail otlet. His otlet is oenthe same hors as other retail otlets. He advertises in theYellow pages as well as in regional toy magazines. He sellsto clients within his region and to eole who have seen hisadvertisement. He sells his toys at a rice that enables himto make a roit. Bill wold be considered to be carrying ona bsiness.

examPle: cog o

Tchen makes wooden toys at home. He works on the toysabot si hors a week and sells them only to his amily and

riends. He intends his toy making activity to remain smalland is hay i all he does is cover his costs.

Tchens toy making activity wold be considered a hobby.As sch, Tchen wold not inclde in his income ta retrnany amonts he received rom selling his toys.

Conseqently, he cannot claim any eenses related tohis hobby.

For more inormation, reer toAm I in business?(NAT 2598).

I yore a sole trader or artner in a artnershiinvolved in a bsiness activity that makes a loss, yo mstmeet certain conditions to be able to claim that loss againstyor income rom other sorces (sch as wages). SeeNon-commercial losses on age 38.

a o o-pof ogo?A non-roit organisation is an organisation that is not oeratingor the roit or gain (either direct or indirect) o its individalmembers. These organisations are treated dierently or taroses.

Eamles o organisations that may be non-roit are chrches,commnity centres, cltral societies, environmental rotectionsocieties, blic msems and libraries, scholarshi nds,sorts clbs and traditional service clbs.

We have a range o blications and services seciically ornon-roit organisations (inclding charities).

For more inormation abot non-roit organisationsand their ta obligations:

visit the For Non-roit organisations section o orwebsite at www.ato.gov.au

hone 1300 130 248.


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CHOOSING A BuSINESSSTRuCTuRE 02

When starting a bsiness, its very imortant to choose thebsiness strctre that best sits yor needs.

There are or main bsiness strctres commonly sed bysmall bsinesses in Astralia:

sole trader

artnershi

trst, or

comany.

We cant advise which strctre yo shold choose, bt we canshow yo how dierent strctres will aect the way yorbsiness income is taed.

The strctre yo choose may aect yor ta liability, assetrotection, ongoing costs, or erhas yor clients oreamle, some reer to deal only with comanies.

Whichever strctre yo choose, make sre yo nderstand theresonsibilities that go with that strctre. Tyically, costs andcomleity increase as yo move rom a sole trader to aartnershi to a comany or trst.

Yore not locked into any strctre and yo can change thestrctre as yor bsiness changes or grows.

The table on the net age shows the main eatres o dierentbsiness strctres. It may hel yo decide which strctre isbest or yor bsiness.

For more inormation abot bsiness strctres andresonsibilities, visit the For Bsinesses section o orwebsite at www.ato.gov.au Yo can also contact theOice o Fair Trading in yor state. Comanies can obtaininormation rom the Astralian Secrities and InvestmentsCommission.

I yore not sre which strctre to choose, talk to anaccontant, ta adviser, solicitor or other bsiness adviser.


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02 CHOOSING A BuSINESS STRuCTuRE

eatures O dierent business structures

Structure Features

Sole trader Description:A sole trader is the simlest bsiness strctre and consists o an individal trading on theirown. That erson controls and manages the bsiness.

Tax file number: A sole trader ses their individal ta ile nmber when they lodge their income ta retrn.

ABN:A sole trader who is carrying on an enterrise in Astralia may aly or an ABN or their bsiness

and se this nmber or all their bsiness dealings.

Who pays income tax:The income o the bsiness is treated as the ersons individal income and theyare solely resonsible or any ta ayable by the bsiness. This means that, ater dedcting allowableeenses, they inclde all their bsiness income with any other income and reort it on their individal taretrn.

Sole traders ay the same ta as individal taayers, according to the marginal ta rates (see age 24).Individals who are Astralian residents dont ay ta on the irst $6,000 they earn. This is called theta-ree threshold.

Sole traders generally are reqired to ay pAYG instalments dring the year towards their eectedend-o-year ta liabi lity.

GST:A sole trader who is carrying on an enterrise may aly or GST registration. This can be alied or

on the ABN alication orm. A sole trader is reqired to be registered or GST i their GST trnover is$75,000 or more ($50,000 or more rior to 1 Jly 2007).

Drawings:A sole trader cannot claim a dedction or money they draw rom their bsiness. Amontstaken rom a sole trader bsiness, and regarded by some as their wages are not wages or ta rosesand are not ta dedctible.

Personal services income: I yo are a contractor or consltant dedctions in relation to this income maybe treated dierently (see age 37).

Superannuation: Sole traders are resonsible or their own serannation arrangements and may be ableto claim a dedction or ersonal serannation contribtions. Sole traders mst ay 9% serannationgarantee contribtions or any eligible workers they engage.


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Structure Features

Partnership Description: For ta roses, a artnershi is an association o eole who carry on a bsiness asartners or receive income jointly.

Tax file number:A artnershi needs its own ta ile nmber and ses it when lodging its annal incometa retrn. This can be alied or on the ABN alication orm.

ABN: I the artnershi is carrying on an enterrise in Astralia, it may aly or an ABN and se thisnmber or all artnershis bsiness dealings.

Who pays income tax?A artnershi is not a searate legal entity and doesnt ay income ta on theincome earned by the artnershi. Instead, each artner ays ta on their share o net artnershi income.

While the artnershi doesnt ay ta, it does have to lodge an annal artnershi income ta retrn toshow all income earned by the artnershi and dedctions claimed or eenses incrred in carrying on theartnershi bsiness. The ta retrn also shows each artners share o net artnershi income.

partnershis are not liable to ay pAYG instalments. Instead, individal artners may be liable to ay pAYGinstalments on their share o income rom each artnershi they are a member o (see pAYG instalments onage 25).

Drawings: partnershis cannot claim a dedction or money artners draw rom their bsiness. Amonts

taken reglarly rom a artnershi bsiness, and regarded by some as their wages, are not wages or taroses and are not ta-dedctible.

GST: partners may aly or GST registration or the artnershi i it is carrying on an enterrise. This canbe alied or on the ABN alication orm. A artnershi is reqired to be registered or GST i its GSTtrnover is $75,000 or more ($50,000 or more rior to 1 Jly 2007).

Personal services income: Income and dedctions in relation to this income may be treated dierently(see personal services income on age 37).

Superannuation: partners in a artnershi are resonsible or their own ser arrangements as they arenot emloyees o the artnershi. partners may be able to searately claim a dedction or ersonal sercontribtions. The partnershi mst ay 9% serannation garantee contribtions or any eligibleworkers they engage.


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Structure Features

Trust Description:A trst is an obligation imosed on a erson to hold roerty or income or the beneit oothers (who are known as beneiciaries).

Tax file number:A trst mst have its own ta ile nmber to se when lodging its annal income taretrn. The trstee needs to aly or a ta ile nmber in its caacity as trstee o the trst. A ta ilenmber can be alied or on the ABN alication orm.

ABN: I the trst is carrying on an enterrise in Astralia, the entity that is trstee may register or an ABN in

its caacity as trstee o the trst.

Who pays income tax?: Whether or not a trst has a ta liability deends on the tye o trst, the wordingo its trst deed and whether the income earned by the trst is distribted (in whole or in art) to itsbeneiciaries. Where the whole o the net trst income is distribted to adlt resident beneiciaries, the trstwill have no liability. Where all or art o the net trst income is distribted to either non-residents or minors,the trstee will be assessed on that share on behal o the beneiciary. In this case, the beneiciary isreqired to declare that share o net trst income on their individal income ta retrn, and also claim acredit or the amont o ta liability aid on their behal by the trstee. Where the net trst income isaccmlated by the trst, the trstee will be assessed on that accmlated income at the highest individalmarginal rate.

I a trst is carrying on a bsiness, each year all income earned by the trst and dedctions claimed oreenses incrred in carrying on that bsiness mst be shown on a trst ta retrn. The ta retrn alsoshows the amont o income distribted to each beneiciary.

Trsts are not liable to ay pAYG instalments. Instead the beneiciaries or trstees may be liable to ayinstalments (see pAYG instalments on age 25).

GST: I the trst is carrying on an enterrise, the entity that is trstee can register or GST in its caacity astrstee o the trst. This can be alied or on the ABN alication orm. A trst is reqired to be registeredor GST i its GST trnover is $75,000 or more. The registration threshold or non-roit organisations is$150,000.


Superannuation:Trsts mst ay 9% serannation garantee contribtions or any eligible workers theyengage. This may inclde the Trstee i they are also emloyed by the Trst.

Trsts may need to ay ser contribtions or trstees i they are also emloyed by the trst. A trst alsoneeds to ay ser contribtions or other emloyees o the trst.


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Structure Features

Company Description:An incororated comany is a distinct legal entity with its own income ta liability, searaterom an individals income ta. Comanies are reglated by the Astralian Secrities and InvestmentCommission.

A comany is a more comle bsiness strctre, with set- and administrative costs sally being higherthan or other bsiness strctres. A comany is reqired to have a searate bank accont.

For ta roses, a comany means a body or association, incororated or nincororated, bt does not

inclde a artnershi or a non-entity joint ventre.

Tax file number:A comany needs to aly or a ta ile nmber and se it when lodging its annal incometa retrn. This can be alied or on theABN registration for companies, partnerships, trusts or otherorganisations (NAT 2939).

ABN:A comany registered nder the Corporations Act 2001 is entitled to an ABN. A comany that is notregistered nder the Cororations Act may register or an ABN i it is carrying on an enterrise in Astralia.

Who pays income tax?: I a bsiness is rn as a comany, the money earned by the bsiness belongs tothe comany.

under the sel-assessment system, comanies have to lodge an annal comany ta retrn, which showsthe income and dedctions o the comany and the comanys income ta ayable. Comanies alsosally ay pAYG instalments, which are credited against their annal income ta liability.

A comany ays income ta on its assessable income (roits) at the comany ta rate, which is crrently30%. The amont o ta to be aid is redced by any pAYG instalments reorted dring the year. There isno ta-ree threshold or comanies (see Ta ree threshold on age 24).

GST: A comany may aly or GST registration i it is carrying on an enterrise. This can be alied or onthe ABN alication orm. A comany is reqired to be registered or GST i its GST trnover is $75,000 ormore ($50,000 or more rior to 1 Jly 2007). The registration threshold or non-roit organisations is$150,000 ($100,000 rior to 1 Jly 2007).


Superannuation: Comanies mst ay 9% serannation garantee contribtions or any eligible workersthey engage, inclding comany directors.


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Yo will need to register yor bsiness or a nmber o taobligations.

Yo can comlete and lodge alications or most taobligations:

online at www.abr.gov.au

throgh yor ta agent

by honing 1300 720 092 or aer alication orms.

Yo can also download TFN and ABN alication orms.However, individals oerating as sole traders cannot aly ora ta ile nmber online. I yo dont already have a ta ilenmber (TFN), hone 1300 720 092 or a aer alication.

The ABN alication orm contains a section or registering orGST, wine eqalisation ta, lry car ta, pAYG withholdingand ringe beneits ta. These obligations are elained below.

Yo can register or these obligations when yo aly or anABN, or at any later time. I yo need to register later, yo cando so:

by registering online i yo already have a digital certiicate

sing the ormAdd a new business account (NAT 2954),available at www.ato.gov.au or order a orm to be sent to yoby honing 13 28 66.

cOmmOn business tax reGistratiOnsThe most common ta registrations bsinesses needs are:

a ta ile nmber (TFN)

an Astralian bsiness nmber (ABN)

goods and services ta (GST)

ay as yo go (pAYG) withholding, and

el ta credits.

wOrkinG Out i yOu need a tax ile numberI yo have decided to oerate yor bsiness as a sole trader,yo se yor individal ta ile nmber or both yor bsiness

and ersonal dealings with s.

Most eole already have an individal ta ile nmber, bt i yodont, yo will need to comlete a Tax file number application orenquiry for an individual(NAT 1432) and send it to s. Yo canhone 1300 720 092 to have one sent to yo.

I yo have chosen to oerate yor bsiness throgh aartnershi, comany or trst, yo will need a searate ta ilenmber. Yo can aly or a ta ile nmber when yo registeror an ABN.

wOrkinG Out i yOu need an australianbusiness numberIt is not comlsory to have an ABN, bt having an ABN will:

make it easier to register or GST and other bsiness taregistrations sch as pAYG withholding

avoid having amonts withheld rom ayments to yo.Bsinesses will be reqired to withhold 46.5% o anyayments they make to yo nless yo qote an ABN.

Each entity (sole trader, artnershi, comany or trst) receives

one ABN, regardless o the nmber o commercial activities orenterrises it ndertakes. For eamle, a single entity rnning acae and a newsagency wold have only one ABN. Bt i yoset searate comanies, artnershis or trsts, each entitymst register in its own right.

a g (abr)I yo are a artnershi, comany or trst, yo can comleteand lodge an alication or an ABN and bsiness TFN online atwww.abr.gov.au

When yo register or an ABN, the bsiness details rom yoralication are added to the Astralian Bsiness Register. Theregister is the central collection, storage and veriication system

or basic identity inormation abot all bsinesses with an ABN.

Yo can log onto the register to check the bona ides o an ABNqoted to yo to ensre yo comly with the no ABNwithholding rles.

Yo can also date yor details online. To do this yo will needa digital certiicate. Changes made will be dated immediatelyonce all details have been sbmitted and conirmed by the ABR.

For more inormation abot registering or a digitalcertiicate, visit or website at www.ato.gov.au/onlineservices

03 REGISTERING YOuR BuSINESSFOR TAx puRpOSES


17/68


03 REGISTERING YOuR BuSINESS FOR TAx puRpOSES

t a op abnI yo choose a comany strctre, yo will irst need to registeryor comany with the Astralian Secrities and InvestmentsCommission. The commission will isse yor comany with anAstralian Comany Nmber (ACN).

When yo register yor comany or an ABN, yo will be askedto sly yor ACN. The ABN issed to yor comany by theAstralian Bsiness Registrar will be the comanys ACN ls twocheck digits at the beginning, as shown in the ollowing table.

a

12 345 678 901

Check digits Astralian Comany Nmber

For more inormation visit www.asic.gov.au

Put your ABN on your invoicespt yor ABN on yor bsiness stationery, esecially yor

invoices. I yo dont, other bsinesses mst withhold46.5% rom any ayment to yo. Comanies dont need toshow both an ACN and ABN on their invoices.

wOrkinG Out i yOu need tO reGisterOr GstYo mst register or GST i yo are carrying on a bsiness orenterrise, and:

yor crrent or rojected GST trnover is $75,000 or more($150,000 or more or non-roit organisations)

yo rovide tai travel, or

yo wish to claim el ta credits.

I yor GST trnover is below $75,000, yo may choose toregister or GST. Yo mst continally monitor yor trnover. Assoon as yo realise that yor crrent or rojected GST trnoveris $75,000 or more, yo have 21 days to register.

When registering or GST, yo have to indicate whetheryo will accont or GST on a cash or non-cash basis.Make sre yo nderstand these terms beore yo register.

For more inormation on GST and calclating yor GST

trnover or registration, reer to GST for small business(NAT 3014).

wOrkinG Out i yOu need tO reGister OrPayG withhOldinGYo need to register or pAYG withholding i yor bsinessmakes ayments yo are reqired to withhold amonts rom.For eamle, i yor bsiness:

makes ayments o salary, wages, commissions, bonses orallowances to an individal as an emloyee (inclding yorseli yo oerate yor bsiness throgh a comany or trst)

makes ayments to yo as a director

makes ayments to contractors nder a volntary agreement(see age 42) or labor hire arrangement, or ayments thatare seciied (or eamle, erorming artists erorming inromotional work), or

withholds 46.5% rom ayments to sliers becase theyhave not qoted their ABN or shown they do not have toqote it.

As a sole trader or artner, yo are not an emloyee othe bsiness strctre. Yo get money rom the bsinessthrogh drawings, not wages. There is no need to withholdrom these drawings or register or pAYG withholdingnless yo are reqired to or other reasons, inclding those

stated above.

I yo dont withhold rom a ayment to a slier who doesntqote an ABN (bt is reqired to do so), yo may have to ay aenalty to s eqal to the amont yo didnt withhold.

Yo can register or pAYG withholding when yo aly or anABN or at any later time.

For more inormation, reer to:

PAYG withholding for small business (NAT 8075)

No ABN withholding questions and answers (NAT 5931)

Should your suppliers quote their ABN? A guide forbusiness (NAT 3346). This incldes a statement that aslier can comlete to show why they dont need toqote an ABN.


18/68



Other business tax reGistratiOnsOther bsiness ta registrations yo may need are:

ringe beneits ta i yo rovide ringe beneits to emloyees

wine eqalisation ta i yo are a wine manactrer,wholesaler or imorter

lry car ta i yo are a retailer, wholesaler or manactrero lry cars, and

el ta credits i yo se eligible el in yor bsiness.

spoYo dont have to register with s or ser roses, bt yodo need to oer yor eligible emloyees a choice o ser nd.I yor eligible emloyees do not choose a nd yo mst aytheir ser contribtions into the emloyer nominated nd.

g f I yo are an emloyer and rovide ringe beneits to yoremloyees, yo may have to ay ringe beneits ta.

We recommend yo register when yo have decided yo willrovide beneits.

Some common ringe beneits are:

se o a work car by an emloyee or director, andaying rivate eenses or an emloyee or director,or eamle

health insrance costs

clb membershis

school ees

holiday eenses, or

on-site accommodation.

For more inormation abot ringe beneits, reer toFringe benefits tax for small business (NAT 8164).

w o Wine eqalisation ta (wine ta) is a vale-based ta o 29% onwholesale sales o wine, or an eqivalent vale when there is nowholesale sale.

Wine manactrers, wholesalers and imorters collect wine taand send it to s. The Astralian Cstoms Service collects wineta on imorted wine. Retailers will not have a wine ta liabilitynless they bottle or ackage wine or sale or make their ownwholesale sales o wine (that is, to a reseller). The retailer is notentitled to a GST credit or wine ta.


Wine equalisation tax(NAT 2962)

Changes to the wine equalisation tax(NAT 11759)

The wine industry: how the use of invoices with a WEGlabel affects you (NAT 5007).

l

Cars with a GST-inclsive vale above the lry car tathreshold ($57,193 or 200708) are sbject to lry car ta.The lry car ta threshold is eqal to the car limit, which isreviewed each inancial year and may change.

The 33% ta is ayable on the ortion o the GST-eclsivevale o the car that eceeds the threshold.

Retailers, wholesalers and manactrers o lry cars mayhave a liability or lry car ta. Imorters (inclding rivatebyers) also ay lry car ta.

For more inormation on the lry car ta threshold,reer to Luxury car tax(NAT 3394).

An increase in the rate o lry car ta rom 25% to33% is sbject to assage o measres annonced by theFederal Government in the May 2008 bdget.

Fel ta credits rovide most bsinesses with a credit or theel ta (ecise dty) inclded in the rice o el sed inbsiness activities, tools, machinery, lant, eqiment andheavy vehicles. The only els that are not eligible are els sed

in light vehicles o 4.5 tonne gross vehicle mass (GVM) or lesstravelling on a blic road and alternative els.

This means most bsinesses can access el ta credits itsjst the rate that varies deending on how yo se the el.

Alternative els inclding, LpG, LNG, CNG and ethanol will notbe eligible or el ta credits ntil 1 Jly 2011. However, yomay be eligible or a el grant nder the energy grants creditsscheme i yo se alternative els in a vehicle with a grossvehicle mass o at least 4.5 tonnes travelling on a blic road.


19/68



For more inormation:

hone s on 13 28 66 between 8.00am and 6.00m,Monday to Friday

reer to

Fuel tax credits guide for business (NAT 14584)

Alternative fuels (NAT 15227).

chanGinG yOur reGistratiOn detailsOnce yo are registered, yo mst tell s i yor details orbsiness circmstances change.

Yo can date yor registration details on the AstralianBsiness Register at www.abr.gov.au or by honing 13 28 66.

I yo have a digital certiicate yo can date yor details onthe Bsiness portal at www.bp.ato.gov.au

cancellinG a reGistratiOnI yo need to cancel yor registration, hone 13 28 66 and wewill hel yo work throgh what yo need to do.

nOn-tax business reGistratiOnsYor bsiness may need other l icences, ermits or registrationsto oerate. Things yo may need to consider cold inclde theollowing.

rgg o Most bsinesses will need to register their bsiness ortrading name.

Yo can carry on a bsiness in yor own name withotregistering a trading name i yo dont change or add anythingto yor name. For eamle, i yor name is John Smith, yodont have to register a name to trade as J Smith or John Smith.

Bt i yo trade as John Smith Landscaing, yo need to registerthe name with the relevant government body in yor state.

When yo aly or an ABN yo are asked to sly the tradingname o yor bsiness. So make sre yo register yor tradingname beore yo aly or an ABN.

For more inormation, visit www.business.gov.au

Gg a cop nI yor entity is a comany yo need to aly or an AstralianComany Nmber beore alying or an ABN.

s go Some bsinesses reqire licences to oerate. These are sallyissed by yor state government. Most states have a smallbsiness deartment, which can tell yo what licences yo willneed and how to get them.

co pYo may need a concil ermit to oerate yor bsiness, oreamle, to se a bilding or a seciic rose, or sell oodor dangeros goods. Check any reqirements with yorlocal concil.


visit business.gov.au the Astralian Governmentsbsiness resorce website, or

check the White ages nder small bsiness.


20/68



examPles: rgo

Alex

All Electrical

Ale started his own bsiness as an electrician on1 Jly 2006. He does reairs onsite or at his worksho.

Strctre sole trader

Eected trnover $40,000

Sta works alone

Business registrations for All Electrical:

O Ta i le nmber Ale doesnt need a searateta ile nmber becase, as asole trader, he ses hisindividal ta ile nmber.

P ABN Ale needs an ABN as he isgoing to register or GST andneeds to qote an ABN whendealing with other bsinesses.

P GST Ale doesnt have to registeror GST becase his eectedtrnover is less than $75,000,bt he reers to charge GSTand claim GST credits.

O pAYG withholding Ale lans to work alone, withno emloyees. He can registerlater i he needs to (oreamle, i he needs towithhold rom a slier thatdoesnt qote an ABN).

O Fringe beneits ta Ale has no emloyees.

Ale can register or an ABN and GST:

online at www.abr.gov.au orby honing 13 28 66 to obtain an ABN alication orm.

He cant aly or a TFN online.

Renee Fashions Pty Ltd

On 1 Jly 2006 Renee started her own clothing sho,Renee Fashions. At the same time she created acomany, Renee Fashions pty Ltd, throgh which sherns the bsiness.

Strctre comany

Eected trnover $190,000

Sta three (inclding Renee)

Business registrations for Renee Fashions Pty Ltd:

P Ta ile nmber The comany needs asearate ta ile nmber.

P Astralian ComanyNmber (ACN)

The comany needs an ACN.

P ABN The comany needs to alyor an ABN as it mst registeror GST and needs to qotean ABN on its ta invoices.

P GST Renee Fashions pty Ltd mstregister or GST becase itseected trnover is morethan $75,000.

P pAYG withholding As an emloyer, ReneeFashions pty Ltd needs toregister or pAYG withholding.

P Fringe beneits ta Renee lans to have rivatese o a comany car, whichis a ringe beneit.

Renee can obtain a ta ile nmber or the comany andregister it or an ABN, GST and pAYG withholding:

online at www.abr.gov.au orby honing 13 28 66 to obtain an ABN alication orm.


21/68



yOur reGistratiOn checklistuse this registration checklist to record what ta registrations yo need or yor bsiness and ind ot how to register.

Tick ifyouneed toregister

Registration type Can you apply onyour ABNapplication form?

Can you register online? Who to call ifyou need help

Individal ta ile nmber(Only if you dont have onealready!)

O

Comlete a ta ile

nmber alicationorm (NAT 1432) andsend it to the Ta Oice.

O

Visit www.ato.gov.au to

download the individal taile nmber alication orm.

Ta Oice

13 28 61

partnershi ta ile nmber P P

Visit www.abr.gov.auto register online.

Ta Oice

13 28 66Comany ta ile nmber P

Trst ta ile nmber P

Astralian bsiness nmber(ABN)

P

Astralian Comany

Nmber(For companies only youneed an ACN before youcan apply for an ABN)

O O

Visit www.asic.gov.auto download an ACNalication orm.

Astralian

Secrities andInvestmentsCommission

1300 300 630

Bsiness name O

See the deartmento jstice, consmeraairs or air tradingin yor state.

O

Visit www.business.gov.au andollow the links to yor statesalication orm.

Look nderBsiness orStategovernment inyor honebook.

GST P P

Visit www.abr.gov.au

Yo can aly online whileregistering or an ABN. Wemay contact yo or moreinormation in relation to wineeqalisation ta, lry car taor el ta credit.

Ta Oice

13 28 66pAYG withholding P

Fringe beneits ta P

Wine eqalisation ta P

Lry car ta P

Fel ta credit P


22/68


poor record keeing is one o the main reasons why manysmall bsinesses ail.

Good bsiness records will hel yo manage yor bsiness,meet yor ta obligations and make sond bsiness decisions.They will save yo time and money.

Seciically, good records will hel yo:

work ot yor costs and roitability, and monitor yor cashlow and stock

demonstrate yor inancial osition to banks and other

lenders, or to rosective byers o yor bsinessmake best se o yor accontant. use their time orbsiness and inancial lanning, not or sorting ot yorshoebo ll o receits and invoices

comlete and lodge activity statements and incometa retrns

make ser contribtions by the qarterly ct-o dates

ay yor ta on time.

leGal requirementThe inal reason or keeing good records is that the ta lawsreqire yo to. We can imose enalties i yo ail to kee

aroriate records. Yo are reqired to kee records thatelain all yor bsiness transactions.

Yo mst kee yor records in writing in the English langage.I yo kee electronic records on yor comter, they mstbe in a orm that is readily accessible and convertible intowritten English.

Any books o accont, records or docments related torearing yor income ta retrn mst be retained or at leastive years ater they are reared, obtained or the transactioncomleted (whichever occrs last).

Some records need to be ket or longer than ive years:

For caital gains ta, yo mst kee records or at least ive

years after the relevant caital gains ta event, or eamle,the sale o an asset. The rchase o the asset may haveoccrred many years beore the disosal o the asset. Tostreamline record keeing yo can choose to enterinormation rom yor CGT records into an asset register. Forrther details see the Guide to capital gains tax(NAT 4151).

When claiming rior year losses, yo mst kee recordsrelating to those losses or ive years ollowing the year inwhich the loss is claimed.

keePinG manual Or electrOnic recOrdsGood records are the ondation o a good bsiness, so its agood idea to have a sitable record keeing system ready to gorom day one. I yo need to, get some hel to set andmanage yor records.

Yor record keeing system shold be as simle as yorbsiness needs and caabilities allow.

Yo can kee yor records electronically (on comter) ormanally (on aer). Manal books are generally qicker to

begin with and to enter inormation, bt can be slower atthe end o the month or at ta time when everything has tobe totalled.

A variety o electronic record keeing ackages is available.They can take more time to set bt rovide advantagesinclding atomatically totalling amonts, rinting invoices,and roviding smmary details or yor activity statements andta retrns.

We rovide a ree electronic record keeing ackage, e-Record.Available in pC and Macintosh versions. e-Recordis designedor bsinesses that oerate on a cash basis, crrently keeaer records and have one bank accont.

Yo can download a coy oe-Recordrom orwebsite at www.ato.gov.au/erecord or by honing13 72 26 to order a CD-ROM (NAT 3043).

I yo do decide to go electronic, make sre yo choosea sotware ackage that meets yor bsiness needs andor reqirements.

I yo are thinking abot getting a ta adviser to helwith yor ta, talk to them beore yo choose a recordkeeing system so that they can advise yo.

04 KEEpING GOOD RECORDS


23/68



General recOrds yOu need tO keePRecords yo need to kee inclde:

io oKee records o all sales and barter transactions, or eamle,invoices, receit books, cash register taes and records ocash sales.

ep o p oKee records o all bsiness eenses, inclding cashrchases. Records cold inclde receits, invoices,cheqe btts or credit card vochers, and diaries to recordetty cash eenses.

b oKee all bank records, sch as bank statements and loandocments.

a p oKee details o what assets yo by and what yo send onthose assets. An asset register can hel yo kee track othese eenses.

co gKee coies o contracts and ranchise or other agreements.

y- oThese inclde creditors lists, debtors lists and worksheets ordereciating assets.

mo pFor certain work, car and bsiness travel eenses, it is notalways ossible to get a receit. Bt yo can still claim theeense as a dedction as long as yo record the details othese eenses in a diary or logbook.

For more inormation, reer to Record keeping for smallbusiness (NAT 3029).

sPecial recOrds yOu may need tO keePAs well as general records, yo may need to kee otherrecords, deending on yor ta obligations or the tyeo eense.

Gst oThe main GST records yo need to kee are ta invoices andadjstment notes. Remember, yo need a ta invoice to claimGST credits.

Also kee any other docment that records an election, choice,estimate, determination or calclation made or the roses oGST law.

For more inormation, reer to How to set out taxinvoices and invoices (NAT 11675).

epo o oo oFor emloyees or contractors, yo need to kee:

records o wages, allowances and other ayments madeto them

serannation garantee records, inclding aymentsmade and records that show yo have met yor choice oser nd obligations

records o ringe beneits ta calclations

coies o ta ile nmber declarations or withholdingdeclarations, and

coies o any contracts yo have with contractors.

moo oYo may have to kee logbooks, lease or loan docmentsor yearly odometer readings or motor vehicles yo se inyor bsiness.

so oBsinesses that sell goods sally have to do a stocktake(a hysical cont and valation) at 30 Jne each year. Changesin stock levels are taken into accont in working ot taableincome or the year.

There are simler stocktake rles available or small bsinesseswith less than $2 million trnover.

no abn ogKee statements by sliers who have not qoted their ABN,records o any amonts yo have withheld rom them, andayment smmaries yo have given them.


24/68



Put your ABN on your business stationery,esecially on yor invoices. The bsinesses yo deal withneed this inormation so they dont have to withhold thehighest rate o ta rom ayments or slies that yovemade. I yore registered or GST, other bsinesses willalso need yor ABN on yor ta invoice to claim GSTcredits or GST inclded in the rice o goods and servicesyo sly to them.

For more inormation, reer to Statement by asupplier (reason for not quoting an ABN to an enterprise)(NAT 3346). This incldes Should your suppliers quotetheir ABN? ... a guide for business.

To sort yor claims or el ta credits, yo mst keerecords that show yo:

acqired the el

sed it in yor bsiness, and

alied the correct rate when calclating how mch yocold claim.

Yo mst kee these records or ive years ater yo makethe claim.

I yo are claiming el ta credits o $300 or less in a inancialyear, yo do not have to kee records o el rchases.

For more inormation, reer to Take credit where its due register for fuel tax credits (NAT 15397).

recOrd keePinG tiPs

tp 1: u o pg o ooThis is a ree, interactive sotware rogram that will hel yonderstand what records yo need to kee and evalatewhether yor record keeing ractices are adeqate.

It rovides a list o records tailored seciically or yor bsiness,a reort on how well the bsiness is keeing its records, andsggested imrovements where aroriate.

We cannot access the inormation yo enter in the tool.

To download the record keeing evalation tool, visit

or website at www.ato.gov.au/recordkeeping

tp 2: s p goo fg o o oThis will hel yo kee the right records and have themavailable when yo need them. Get into a rotine and do yorbooks reglarly.

tp 3: Write enogh inormation on yor cheqe btts so that lateron yo (or yor accontant) can nderstand what the aymentwas or.

tp 4: c p ppIt is advisable (and sally easier) to kee bsiness and ersonalbanking in searate acconts. I yo have a comany or trst, itis a legal reqirement. Avoid aying ersonal eenses romyor bsiness accont.

tp 5: co- o oWhen yo ay bills, write the invoice nmber on the cheqebtt, and the cheqe nmber on the invoice. This will hel yotrack down inormation i any roblems arise later.

tp 6: rg o o oo Reconciling yor acconts hels detect errors or omissions.It cold save yor accontant time which will save yo money.

tp 7: ao pg o o gpI yo se a cash register yo may discard yor cash registertaes ater one month, rovided yo kee Z-totals and theyhave been reconciled with actal sales and banking or theeriod. Otherwise, yo mst kee the ll rolls or ive years.The Z-total is the igre rinted by the cash register showingthe total o all recorded takings or a day.



25/68


sel-assessmentAstralias income ta system works on the sel-assessmentrincile. This means we initially accet the accracy o theinormation yo rovide, and calclate yor ta liability onthis basis.

Later on we may ask yo to show records to sort yorinormation, so its imortant to kee the necessary records toveriy yor claims (see Keeing good records on age 20).

Income ta is levied on the taable income o a erson or

bsiness, which is worked ot sing the ollowing ormla:

Assessable income mins allowable dedctions = taableincome (the amont yo ay ta on)

assessable incOmeMost money yo receive in carrying on yor bsiness isassessable income. There are some ecetions, sch as:

loans yo receive

money yo (the owner) contribte, and

GST yo collect, or GST credits.

For more inormation on what is inclded in assessableincome, reer to Income tax and deductions for smallbusiness (NAT 10710).

allOwable deductiOnsMost eenses incrred in carrying on yor bsiness arededctible and yo can generally:

claim an immediate dedction or eenses that arenecessary or the everyday rnning o yor bsiness, and

claim a dedction over a nmber o years (dereciation) orother eenses, or eamle, caital assets sch asmachinery, tools or comters.

Not all eenses are allowable dedctions. Eenses that arenot allowable dedctions are:

loans made by the bsiness

money drawn or borrowed rom the bsiness by the owner

rivate or domestic eenses, and

GST (i yo can claim it as a credit on yor activity statement).

I yo echange goods or services or items other thancash (that is, yo trade or barter), yo mst inclde in yorassessable income the vale o the goods or services yoget in echange.

For more inormation, reer to Bartering and barterexchanges (NAT 9748).

taxable incOmeWhen yo have worked ot yor assessable income andallowable dedctions, yo can calclate yor taable income.This is the amont yor income ta retrn will show as the nettaable income rom yor bsiness. It is the amont yo ayta on.

Sole traders and artners shold not conse amonts drawnrom the bsiness to live on (drawings) with taable income.Yo have to ay ta on the taxable income of the business,regardless o the amont o drawings yo make over the year.

Yo mst lodge an income ta retrn or any year inwhich yo carry on a bsiness, even i yo eect to haveno income ta liability.

Remember, activity statements are dierent rom income taretrns. Even i yo reort yor pAYG instalments and otherobligations on an activity statement, yo mst still lodge anincome ta retrn.

CALCuLATING INCOME TAx 05


26/68


05 CALCuLATING INCOME TAx

wOrkinG Out hOw much tax tO PayTo work ot how mch ta yo have to ay, aly thearoriate ta rate to yor taable income. This will varyaccording to yor bsiness strctre.

See Ta rates on age 26 or eamles o how a soletrader and a comany work ot their ta ayable.

c o The ta rates or sole traders shown in the ollowing tables alsoaly or income received by:

artners in artnershis

most beneiciaries o trsts, and

yo as an emloyee o yor trst or comany.

t 200708

Taxable income Tax payable

$0 $6,000 Nil

$6,001 $30,000 15% o amont over $6,000$30,001 $75,000 $3,600 ls 30% o amont

over $30,000

$75,001 $150,000 $17,100 ls 40% o amontover $75,000

Over $150,000 $47,850 ls 45% o amontover $150,000

t 200809*

Taxable income Tax payable

$0 $6,000 Nil$6,001 $34,000 15% o amont over $6,000

$34,001 $80,000 $4,200 ls 30% o amontover $34,000

$80,001 $180,000 $18,000 ls 40% o amontover $80,000

Over $180,000 $58,000 ls 45% o amontover $180,000

Medicare levy*

I yo are an Astralian resident and yor taable income isabove the low income threshold, it is likely yo will have toay 1.5% o yor taable income as a Medicare levy. Yomay also have to ay the 1% Medicare levy srcharge i yodont have adeqate rivate atient hosital medicalinsrance and yor taable income is more than:

$100,000 i yo are single with no deendent children

$150,000 i yo have a sose or deendent child. Thisamont increases by $1,500 or each deendent childater the irst.

* At the time o rinting the 200809 ta rates and Medicare levy srchargethresholds are sbject to assage o measres annonced by the FederalGovernment in the May 2008 bdget.

w o op?The comany ta rate or the 200809 income year is 30%. Thisrate is alied eqally to all the taable income o a comany.unlike individals, comanies do not have marginal ta rates orta-ree thresholds.

Emloyees o a comany (which sally inclde the owner ordirector) mst inclde any wages or salary rom the comany intheir individal ta retrn.

I yo earn income mainly rom yor ersonal eorts orskills, yor income may be taed at yor ersonal ta rateeven i it is aid to a comany, artnershi or trst and notdirectly to yo. See personal services income on age 37or more inormation.

makinG Payments tOwards yOur

tax liabilitypay as yo go (pAYG) instalments is a system or individalsand comanies to ay instalments towards their eectedta liabil ity.

In yor irst year o bsiness yo generally dont ay pAYGinstalments. Ater yo lodge yor irst ta retrn showing a roitrom bsiness or investment income, we send yo a letter i yoare reqired to ay pAYG instalments. The letter and additionalinormation will tell yo yor ayment otions, and how oten toay (sally qarterly, bt yo may be able to ay annally).

Once yo are aying pAYG instalments, any instalments yoay dring the year are credited towards yor inal taassessment ater yo lodge yor income ta retrn.


27/68



bgg o p o Yo will need to bdget or yor total income ta liability,esecially in yor irst year in bsiness. This is becase we maynot receive yor ta retrn, and assess yor pAYG instalments,ntil some time ater the end o the irst year.

One way to bdget to ay yor ta is to make volntaryayments to s dring the year. Yo mst be able to estimateyor ta liability to do this.

For more inormation abot making volntary aymentstowards yor ta, hone 13 28 66.

ho o o Soon ater starting bsiness, yo shold be in a osition to workot yor taable income eriodically (erhas weekly, monthlyor qarterly) sing the ormla:

Assessable income mins allowable dedctions

= Taable income

Yo can se weekly, ortnightly or monthly pAYG withholdingtables to see how mch ta yo need to t aside. I yorbsiness is rn as a artnershi or trst yo need to reer to theta rates or individals to calclate yor ll annal liability.

To view the pAYG withholding ta tables and the Taxwithheld calculator, see the Rates, calclators and toolssection on or website at www.ato.gov.au

Pp partnershis are not liable to ay pAYG instalments. Instead, theindividal artners may be liable to ay pAYG instalments on

their share o net income or loss rom each artnershi they area member o.

Similarly, trsts are not liable to ay pAYG instalments. Instead,the beneiciaries or trstees may be liable to ay instalments.


Introduction to pay as you go income tax instalments(NAT 4637)

PAYG instalments fact sheet for individuals (NAT 4269)

PAYG instalments annual income tax instalments forindividuals (NAT 7324)

Companies questions and answers (NAT 7331)

PAYG annual income tax instalments for companies

(NAT 7322)PAYG options for primary producers and specialprofessionals (NAT 4352)

PAYG instalments working out your proportion ofpartnership instalment income (NAT 3494)

PAYG instalments working out your proportion of trustinstalment income (NAT 3495).


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examPles

Alex All Electrical (sole trader)

In 200708 Ale has the ollowing income and dedctions:

bsiness income $58,000

investment income $2,000 (inclded in assessable income)

dedctions $19,900.

Ale incldes these amonts in his 2007-08 individal income ta retrn. His taable income or the year is calclatedas ollows:

Assessable income $60,000 allowable dedctions $19,900= taable income $40,100

To work ot the ta he has to ay, Ale alies the 2007-08 marginal ta rates or individals to each relevant bracket o histaable income. On the irst $6,000 o his taable income the ta rate is 0%. On the net $24,000 (that is, the taable incomerom 6,001 to $30,000) the ta rate is 15%. On the net $10,100 (that is, ntil he reaches his taable income o $40,100) therate is 30%.

Ales 200708 ta is calclated as ollows:

Marginal tax rates

$150,001 45% $0 45% = $0$ 75,001 40% $0 42% = $0

$ 30,001 30% $10,100 30% = $3,030

$ 6,000 15% $24,000 15% = $3,600

0% $6,000 0% = $0

Tax on $26,000 = $6,630

The net ta Ale mst ay is $6,630

Ale will also be sbject to Medicare levy o 1.5%. The threshold alicable to him or the 2007 year is $16,470. The thresholdvaries deending on marital stats and nmber o children.

Medicare levy on $40,100 is $601.50.

The total tax and Medicare levy Alex must pay is $7,231.50.


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Renee Fashions Pty Ltd (company)

In 200708 Renee Fashions pty Ltd has assessable income o $165,000 and allowable dedctions o $152,000 (inclding asalary o $36,000 aid to Renee).

These amonts are inclded in the comanys 200607 comany ta retrn. The comanys taable income or the year iscalclated as ollows:

Assessable income $165,000 allowable dedctions $152,000= taable income $13,000

To work ot the comanys income ta liabili ty, the comany ta rate o 30% is alied to all taable income:

30% (comany ta rate) $13,000 (taable income) = $3,900 (ta to ay)

Renee reorts her salary o $36,000 on her individal ta retrn and ays ta on this salary at the rates or individals.

For more inormation abot income ta or individalsand how the Medicare levy is calclated reer to:

TaxPack(NAT 0976)

Company tax return instructions (NAT 0669)

Partnership and trust tax return instructions (NAT 2297)

PAYG instalments working out your proportion ofpartnership instalment income (NAT 3494).


30/68


06 CLAIMING DEDuCTIONS

what can yOu claim?under income ta law, a erson carrying on a bsiness cangenerally claim a dedction or eenses incrred in carrying onthe bsiness.

There are some basic rles, however:

yo mst have actally aid or committed to sending themoney, and

the eense mst be related to yor bsiness. Yo mst beable to show why yo needed to send the money to carry on

yor bsiness.

coo There is no comlete list o what yo can claim becase whatbsinesses do, and how they do it, varies. Bt the ollowingcommon eenses can generally be dedcted romassessable income:

advertising

bank ees and charges

bsiness travel (away rom home)

decline in vale o dereciating assets (dereciation)

electricity

emloyee wages

the cost o any ringe beneits rovided, and ringe beneitta incrred

hire or lease o lant and eqiment

home oice eenses

interest on borrowed money

motor vehicle eenses

hone eenses

registered ta agent ees

rent or lease o bsiness remises (inclding homebsiness remises)

reairs

ser contribtions or emloyees

trading stock, andtransort and reight.

I in dobt abot what yo can claim, check with s or consltyor ta adviser. Ineligible claims may reslt in yor ta retrnbeing amended and yo may have to ay more ta liability tobe aid.

what cant yOu claim?Yo cant claim:

Private or domestic expenses, or eamle, ood, ordinaryclothing. I the eense is art rivate and art bsiness, yocan claim a dedction only or the bsiness art.

Capital expenses. Caital reers to the eenses oestablishing, relacing, enlarging or imroving a bsinessoeration, as distinct rom everyday working or oeratingeenses.

Yo can claim dedctions or some caital eenses; oreamle, machinery, tools or comters (see Whatdedctions can yo claim or decline in vale? on age 33).

A deduction for GST if you are entitled to claim GSTcredits. Yo claim GST credits searately on yor activitystatement (see age 50).

The superannuation guarantee charge, which yo have toay i yo dont contribte enogh ser or yor emloyeesor i yo contribte ater the qarterly ct-o date.

Expenses incurred before you started your business.Yo generally mst have started bsiness beore yo canclaim dedctions. Bt there are some ecetions and yo can

write o over ive years, at 20% a year, some bsinessrelated caital eenses yo incr beore yor bsinessstarts oerating. For eamle, the cost o easibility stdiesand legal eenses to establish yor artnershi, trst orcomany

claim the cost o licences and ermits, and

start claiming decline in vale (dereciation) o lant andeqiment as soon as it is installed ready or se.

For more inormation abot dedctions orbsiness-related caital costs, reer to Guide todepreciating assets (NAT 1996).

t po o Some eenses may not be dedctible i the ta rles relating toersonal services income aly to yo. See personal income onage 37.


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wOrkinG Out when tO start claiminGdeductiOnsSometimes its easy to identiy when yor bsiness started,or eamle, the date yo started rodction or the date yorsho oened.

Bt this is not always clear and yo may want to recordmilestones in a diary to enable yo and yor ta adviser toestablish a clear or notional start date or yor bsiness.For eamle:

18 March 2006 alied or an ABN

19 March 2006 set bsiness bank accont.

For more inormation on claiming dedctions, reer to:

Income tax and deductions for small business(NAT 10710)

TaxPack(NAT 0976).

Yo mst be able to sort yor claim or anybsiness dedctions. Records to veriy claims or

dedctions inclde:bsiness books

evidence o transactions (sch as invoices and receits),and

evidence o se (sch as motor vehicle logbooks andairline tickets).

Kee records o yor bsiness transactions or ive years, orive years ater yo last sed them to reare a retrn.


claiminG mOtOr vehicle exPensesMost eole se one or more vehicles in their bsiness. Howyo claim motor vehicle eenses diers signiicantly deendingon whether yo oerate yor bsiness as a comany or trst, oras a sole trader or artnershi.

ho o ?

Companies and trustsI yo oerate yor bsiness throgh a comany or trst, the

comany or trst can claim a ll dedction or eensesinvolved in rnning motor vehicles it owns or leases. I thosevehicles are also sed or rivate roses, the comany ortrst may have to ay ringe beneits ta.

Sole traders and partnershipsSole traders and artnershis work ot dedctions or motorvehicles dierently, deending on whether the vehicles sed intheir bsiness are:

bsiness rose vehicles

other vehicles.

b ppo Yo sally get a dedction or the rnning costs o these

vehicles:larger trcks or vans

smaller vehicles (or eamle, tes, wagons or anel vans)that have been heavily modiied or bsiness se, or whererivate se is restricted to home to work travel and very minorother se

other vehicles, or eamle

ordinary cars, station wagons or or-wheel drive vehicles

most other vehicles designed to carry less than one tonne orewer than nine assengers, and

tes and anel vans where rivate se is not strictly limited.

Yo have a choice o methods or working ot yor dedction

or these other vehicles. The methods treat the rivate se ovehicles dierently. They deend on whether yo travel more orless than 5,000 bsiness kilometres a year, as shown in theollowing table.

5,000 business km or less More than 5,000 business km

cents-er-kilometremethod

logbook method

cents-er-kilometre method(claim limited to 5,000 km)

logbook method1/3 o actal eenses method

12% o original vale method


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I yo se more than one vehicle in yor bsiness, yo canchoose the same or dierent methods or each vehicle. I yose the logbook method or more than one vehicle, yo mstmaintain logbooks concrrently, that is, or the same 12-weekeriod or each vehicle.

w o o o ?Yo can:

choose the method that gives yo the best reslt

se dierent methods or dierent carschange methods rom year to year.

Whichever method yo choose, yo mst keearoriate records.

To hel yo calclate yor work related car eenses,we have develoed an electronic work related car eensescalclator. To se it, visit or website at www.ato.gov.auand search sing the term car eenses calclator.

See TaxPack(NAT 0976) or more inormation abot howeach claim method works.

Generally, travel between yor home and lace obsiness is not dedctible and shold not be inclded inyor claim. There are ecetions, inclding:

travel to clients remises where yor home is yor laceo emloyment

i yo need to carry heavy or blky items or tools o trade.

Gst oo oSole traders and artnershis can claim GST credits only inrelation to costs incrred or the bsiness se o a vehicle.

I yore registered or GST and se the cents-er-km, logbook,12% o original vale or 1/3 o actal eenses method to claimincome ta dedctions or car eenses, we seciy the amonto GST credits yo can claim.

For more inormation, reer to GST Blletin GSTB2006/1 How to claim int ta credits or car eenses.

claiminG wOrkinG rOm hOme exPensesI oerate yor bsiness in ll or in art rom home, yo may beable to claim a dedction or:

occancy eenses, sch as rent, mortgage interest, rates,land taes and hose insrance remims

rnning eenses, sch as hone rental and bsiness calls,internet ees, dereciation o oice rnitre and eqiment,and any additional heating, cooling, lighting and cleaningeenses.

Whether yo can claim both rnning eenses and occancyeenses deends on whether:

yor home is yor lace o bsiness and yo have an area setaside eclsively or bsiness activities

yor home is not yor lace o bsiness bt yo have an areaset aside eclsively or bsiness activities

yo work at home bt have no home work area. Yo workwhen others are not resent in a living area or garage bt yorhome is not yor lace o bsiness and yo dont have anarea set aside rimarily or eclsively or bsiness activities.

I yor home is yor lace o bsiness and yo have an area setaside eclsively or bsiness activities, yo may be able toclaim both rnning and occancy eenses.

I yo carry on yor bsiness elsewhere and also do some workat home, yo cannot claim occancy eenses even i yohave a home work area set aside.

The ollowing table shows the dedctions yo can claim or thethree ways yo can work at home.


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What you can claim How you operate your business

Home is your place ofbusiness and you havea home work area

Home is not your placeof business but youhave a home work area

You work at homebut dont have ahome work area

Running expenses

Cost o sing a room(tilities sch as gas and electricity)

Yes Yes Yes

Bsiness hone costs Yes Yes Yes

Dereciation o oice lant & eqiment(eg, desks, chairs, comters)

Yes Yes Yes

Occupancy expenses*

Cost o owning or renting the hose(rent, mortgage interest, insrance, rates)

Yes No No

* I yor income incldes ersonal services income, yo may not be able to claim a dedction or occancy eenses. See personal services income on age 37.

cp g og o oI yor home is yor lace o bsiness, caital gains ta mayaly when yo sell yor home.

For eamle, i yo are carrying on a bsiness at or rom yorhome, yo have a home work area and yor bsiness occies15% o the total area o yor home, yo can claim 15% o yormortgage interest, rent, concil rates and/or insranceremims. Bt 15% o the caital gain yo make when yo sellyor home will be sbject to caital gains ta.

This gain may be redced by the 50% caital gains ta discontand the small bsiness concessions i the relevant conditionsare met. The remaining 85% o the caital gain will be eemtrom caital gains ta.

Caital gains ta may still aly even thogh yo haventclaimed mortgage interest as a dedction.

For more inormation abot caital gains ta, reer to:

Main residence exemption the effect of using your hometo produce income (NAT 10255)

Guide to capital gains tax(NAT 4151)

Guide to capital gains tax concessions for small business(NAT 8384).

ho o ?When working ot yor allowable dedctions, the emhasis is on:

additional costs yo incr becase yo condct bsiness

activities rom home, andeclding any art o an eense that is related to rivate se.

Yo need to have a reasonable basis or aortioning bsinessand rivate costs. For eamle, yo might allocate heating andlighting costs based on the loor area o the bsiness art oyor home, relative to the total loor area.

And as with all claims or dedctions, its imortant to keerecords to sbstantiate yor claims, or eamle:

electricity and hone bills

rental receits.

I yo are carrying on a bsiness at or rom yor home, yo alsoneed to have a reasonable estimate o yor homes vale at thetime yo started yor bsiness. Yo will need this to calclatewhether yo have made a caital gain or a caital loss i yosell yor home.

For more inormation abot working rom homeeenses:

reer to Home-bases business (NAT 10709)

hone 13 28 66.

To hel yo work ot yor eenses relating to a homework area, we have develoed an electronic home oiceeenses calclator. To se the calclator, visit or websiteat www.ato.gov.au and select Rates, calclators & tools Rates, calclators & tools For bsinesses Calclators Income ta.


34/68



examPle

Alex All Electrical (sole trader)

Ale ses his home as his base or his electrical bsiness.He has converted his garage to a worksho, bt does mosto his electrical work on clients remises. He has a van thathe ses to carry his tools and electrical eqiment rom jobto job.

Ale works ot that his worksho covers abot 10% o the

loor area o his home. On this basis, he claims dedctionsor 10% o the costs or gas, electricity, insranceremims, concil rates and mortgage interest.

Based on a review o his itemised home hone bills, heestimates that 10% o calls rom his hose are or bsinessroses. On this basis, he claims 10% o his total callcosts and line rental ees or his home hone.

Ale also claims dedctions or the decline in vale odereciating rnitre that he ses or the bsiness.

utilities, rates, insrance,interest $10,500

Bsiness loor area 10% $1,050

Home hone costs $800

Bsiness se o hone 10% $80

Decline in vale obsiness rnitre $100 $100

Total deductions $1,230

what business travel exPenses canyOu claim?

cop I yo rn yor bsiness throgh a comany or trst, thecomany or trst can claim a ll dedction or eenses orbsiness travel. I the travel is artly or rivate roses, thecomany or trst may have to ay ringe beneits ta.

so ppTravel eenses incrred in rnning yor bsiness arededctible eenses.

I yo travel away rom home overnight, yo mst kee writtenevidence o all eenses incrred.

I the travel is or more than si consective nights, yo mstalso kee a record o all bsiness activities condcted. One wayto do this is to record in a diary:

the natre o any bsiness activity

the day and aroimate time the activity began

how long it lasted

where yo engaged in the activity.

I travel is or both bsiness and rivate roses, yo cannotclaim the rivate eenses.


35/68



what deductiOns can yOu claim Ordecline in value (dePreciatiOn)?Yo may be able to claim a dedction or the decline in vale oyor dereciating assets. A dereciating asset is an asset thathas a limited eective lie and can reasonably be eected todecline in vale over the time it is sed. Eamles inclde:

comters

electrical tools

rnishings

caret and crtainsmotor vehicles.

Yo can claim a dedction or art o the vale o these assetsin each year o their eective lie. That is, the length o time theasset can be eected to be sed or bsiness roses. Weblish a comrehensive list o assets and their eective lie tohel yo work ot these claims, or yo can assess the eectivelie o yor dereciating assets.

Dedctions can be worked ot nder the niorm caitalallowance system or, or most small bsinesses, simlerdereciation methods are available.

uo p o Generally, yo work ot the decline in vale o dereciatingassets sing one o two calclation methods. Either the rimecost method or diminishing vale method. Both methods arebased on the eective lie o the asset.

Sbject to certain conditions, yo can ool assets costing lessthan $1,000 (low-cost assets) or assets that have beendereciated to an adjsted vale o less than $1,000 (low-valeassets) and dedct 37.5% o their vale each year. In the irstyear, a newly acqired asset is dedcted at 18.75%.

Sbject to certain conditions, yo may be able to claim a lldedction or an item costing $100 or less in the year yorchased it.

sp po Alternatively, many small bsinesses with less than $2 milliontrnover can choose to se a simler and more generostreatment o dereciating assets. using the simler dereciationrles yo can:

immediately write o most dereciating assets that cost lessthan $1,000 each

ool most other dereciating assets and dedct them at arate o 30% (i their eective lie is less than 25 years) or5% (i their eective lie is 25 years or more).

prior to 1 Jly 2007, the simler dereciation rles were only

available to bsinesses in the simliied ta system.


or website at www.ato.gov.au/SBconcessions

Guide to depreciating assets (NAT 1996), or inormationabot the niorm caital allowance system

Simplified Guide to concessions for small businessentities (NAT 71874)

Law Administration practice Statement pS LA 2003/8Taation treatment o eenditre on low cost items or

taayers carrying on a bsiness.Yo can also se the online decline in vale calclator. Tose the calclator, visit or website at www.ato.gov.au andselect Rates, calclators & tools Rates, calclators & tools For bsinesses Calclators Income ta.

I an asset is sed artially or rivate roses, yo areentitled to a dedction only or the bsiness-se roortion.


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07 TAx CONCESSIONS FORSMALL BuSINESS

General cOncessiOnsSmall bsinesses with less than $2 million trnover may beeligible or a range o ta concessions.

When calclating yor trnover, yo mst inclde the trnovero any other bsiness yo are connected with.

The small bsiness ta concessions inclde:

choice to accont or goods and services ta (GST) on acash basis

choice to ay GST by instalments

annal aortionment o GST int ta credits

simler trading stock rles

simler dereciation rles

entrereners ta oset

CGT 15-year asset eemtion

CGT 50% active asset redction

CGT retirement eemtion

CGT roll-over rovisions

ringe beneits ta car-arking concession(alies rom Aril 2007)

ay as yo go instalments based on GDp-adjstednotional ta

two-year eriod or amending assessments(ecetions may aly)

immediate dedctions or certain reaid bsiness eenses.


www.ato.gov.au/SBconcessions

Concessions for small business entities (NAT 71398)

Guide to concessions for small business entities(NAT 71874).

Primary PrOducersThe ta laws inclde secial rovisions to hel rimaryrodcers. Eamles o rimary rodction activities incldearming, ishing and aqacltre.

To se these rovisions, yo need to check that yo meetor deinition o carrying on a rimary rodction bsiness.Some o the actors we may consider inclde:

the size or scale o yor activities

whether the activities are roitable or, i not, whether yogeninely believe the activities will be roitable

whether the activities are carried on in the same manner asthat tye o activity is ordinarily condcted by others.

ho o o?The secial rovisions inclde:

accelerated dereciation or some items

secial dedctions or water acilities and landcare oerations

income averaging over to 5 years

concessions or orced disosal or death o livestock

secial treatment or insrance recoveries

secial treatment o roceeds rom early shearing cased bydroght, ire or lood

the non-commercial bsiness losses rles may also not alyto rimary rodcers in some circmstances

access to the arm managements deosit scheme.

Farm management deposits schemeThe arm management deosits scheme can hel yo deal withneven income streams. The scheme allows yo to claim adedction or arm management deosits made in the yearyo deosit.

I yo withdraw a arm management deosit, yo have toinclde the amont o the dedction reviosly allowed in yorassessable income in the year yo withdraw it.

For more inormation abot the secial rovisions orrimary rodcers and the eligibility criteria or being arimary rodcer, reer to:

Taxation Ruling TR 97/11 Am I carrying on a business ofprimary production?

Information for primary producers (NAT 1712)

Tax averaging for primary producers (NAT 8914)

Farm management deosits scheme (NAT 8776)

hone 13 28 66

talk to yor ta adviser.

incOme averaGinG Or sPecialPrOessiOnalsI yo are one o the ollowing secial roessionals, in certaincircmstances yo may be eligible to average yor income overa nmber o years:

artist

athor

comoser

comter rogrammer

inventor

erorming artist

rodction associate

sortserson.


37/68


07 TAx CONCESSIONS FOR SMALL BuSINESS


reer to Income averaging for special professionals(NAT 2475)

reer to Taation Rling TR 2005/1 Carrying on a businessas a professional artist

hone 13 28 66

talk to yor ta adviser.


38/68


08 MAKING CApITAL GAINS

A caital gain or caital loss is the dierence between theamont yo receive when yo sell an asset and what theasset cost yo.

a o ?Not all assets attract caital gains ta.

As a small bsiness oerator, yo most commonly make acaital gain or caital loss when yo sell one o the assets sedin yor bsiness, or eamle, yor bsiness remises or

goodwill. I yo condct yor bsiness throgh a comany ortrst, yo may make a caital gain or caital loss i yo sell yorshares in the comany or interest in the trst.

Caital gains ta does not generally aly to dereciating assetsthat yo se only in yor bsiness, or eamle, tools or motorvehicles. Gains rom these assets are inclded in yor income,while losses are dedctible.

w ?Caital gains ta aects yor income ta liability becase yomst inclde in yor assessable income any net capital gainyo made or the income year.

Yor net caital gain is the total o yor caital gains or the year,mins any caital losses or the year or earlier years, and anyrelevant concessions. There are a range o caital gains taconcessions that can redce the ta ayable on caital gainsmade by small bsiness oerators.

Yo mst kee records o any act, transaction, event orcircmstance that might reasonably be eected to berelevant to working ot a caital gain or caital loss. Yoneed to do this even i the caital gain or caital loss hasntyet haened.


Guide to capital gains tax(NAT 4151)Guide to capital gains tax concessions for small business(NAT 8384).


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CONTRACTORS ANDCONSuLTANTS 09

I yo are a contractor or consltant and yo earn ersonalservices income, secial ta rles may aect what amonts yoinclde in yor assessable income and what dedctions yocan claim. personal services income rles can aly to soletraders, artnershis, comanies or trsts.

PersOnal services incOmepersonal services income is income that is mainly a reward or,or the reslt o, yor ersonal eorts or skills.

Eamles o ersonal services income inclde:income earned

Documents

Tax Basics for Small Businesses