Business taxes in Australia may sound complicated, but once you figure out which ones you must pay, it is simple provided you keep up and file accordingly.
Types of Business Tax
The types of taxes and amounts you pay depend on several factors related to your business. They include:
- your type of business
- the number of employees
- the fringe benefits offered to employees
Once you determine which taxes you must collect and pay to governing agencies, you will need to register for those taxes, maintain regular payments of those taxes, and keep detailed records of all tax activity.
GST
Probably the main tax that almost everyone is aware of is the GST or Goods and Services Tax. Consumers pay this on most of the items they purchase. However, many things are considered GST-exempt. This means you do not have to pay the extra 10 percent tax on these things. Some items that are GST-exempt include:
- most food
- some medications
- some medical healthcare services
- some childcare services
- some charitable activities
Other Business Taxes
There are other forms of taxation including business income tax, Capital Gains Tax, Fringe Benefit Tax, Pay-As-You-Go withholding and installment paying, fuel tax, luxury car tax, payroll tax, and more. Where you live in Australia will determine which state taxes you must pay as each state has different tax obligations. The federal taxes are the same regardless of where you are in the country. This is why you must know what your business tax obligation is as it will vary from state to state. This is where it gets complicated but with the right information, you should be able to sort out what your business has to do to be tax compliant.
Business Tax Penalties
Several penalties can be assessed for businesses that do not meet their tax obligations. They vary in severity, but may include:
- penalty units for violations
- penalties for making false statements or providing misleading information
- penalties for failing to meet other tax obligations
- penalties for filing late
- penalties for not withholding
If you are just starting a new business, the last thing you want is to fail to meet your tax requirements. This can hurt your business. It can damage the reputation and remove any credibility built up to that point. For your business to be successful and maintain a good business standing, it needs to stay on top of business tax payments. Falling behind or ignoring them can result in penalties that could increase what you owe the government. We cannot stress further how important it is to take business tax seriously as an entrepreneur.
More On Penalty Units
Penalty units are the system used to assess fines. Each penalty unit has a set dollar value and each offense equals so many penalty units. The number of penalty units multiplied by the value of a single unit determines the size of the fine a business is assessed for a violation. As an example, if a penalty unit (PU) is valued at $5 and an offense is worth 100 PUs, the fine associated with that penalty is $500. By keeping up with your business tax obligation, you can avoid earning penalty units and not have fines to pay.
For Help With Understanding Your Tax Obligations, Call ACBC
Action Coach Business Coaching is your business coach in North Brisbane. They can help you determine what your business tax obligations will be and help you get set up to collect and pay them. Call ACBC today, your local business coaching services in Brisbane. Your Brisbane business coach is ACBC.
Conclusion
As a business owner in Australia, you are obligated to collect various taxes for federal and state governments. The type of business you have, how many people you have working for you, the fringe benefits you give them, and which state you operate your business in will all have an impact on the types of taxes your business will pay. It sounds like a lot of work, but once you know your business tax obligation, it should be easy to stay on track.
If you are unsure about where to start with tax registration or anything else to do with business tax, you can seek assistance from a business coach. Remember, if you do not meet your business tax obligations as required, there are penalties and these may damage the business you have worked hard to build.