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This month we're talking all things tax, from crytpocurrency, to investing your tax return, and how to get the best refund. Today we have some tax tips for small businesses. If you are a sole trader or self employed, check out last week's blog!
The government gives some tax breaks to small business owners, but to qualify, you must ensure your company does constitute a small business in the eyes of the tax office. The Australian Tax Office (ATO) defines any company that has a turnover of less that two million dollars per year a small business. This amount is calculated by taking the gross income excluding GST of every affiliated business under the umbrella of the company.
A small business can claim a deduction for any purchase of any asset under the value of $20 000, however, there are a few stipulations:
This tip is useful for anybody, small business owner of otherwise: keep all your records! Collecting any receipts and files that you acquire during the year to make tax time a breeze. Having records ready will make it that much easier to hand everything over to an accountant and not have to worry about tax come July 1st.
The ATO will often update requisites for small businesses, so it is important to keep on top of any changes that may have come about since last year. For example, from July 1st 2017, the ATO mandates that all small businesses with 20 or more employees use Single Touch Payroll to report, unless granted exemption. Check the ATO website to stay up to date.
In this financial year, most small businesses will pay tax at a rate of 27.5%, however others will pay over 30%. Currently, the law states that companies will be eligible for the lower rate if they are "carrying on a business," and turnover under $25 million per annum. There is, however, a proposal to introduce a test that will determine if small businesses are eligible for the lower tax rate. As the law is complex, and could mean you save a great deal on tax, be sure to employ a dependable accountant who knows the ins and outs, and ensure you get the best rate possible.
Beyond Debt is a trading name of DCS Group Aust Pty Ltd. Australian Credit License: 382607. RDAA Number: 1126. PO Box 3074 Newstead, QLD, 4006.
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