Taxation Issues for your Small Business
Tax Help for Freelancers and Small Businesses
If you are obtaining income from your business and it’s not a hobby, then you need to declare
your taxable income. You can claim deductions for certain expenses that you incur when running your
business. Here’s a quick rundown on the small business tax issues that you need to consider when
starting your own business.
- What records do you need to keep and how can you set up a record keeping system?
- How do goods and services tax (GST) actually work for small businesses?
- What do you need to report in your tax return?
- How often do you have to lodge your business activity statement (BAS) and what is it?
- How does working from home or having a small business alter your tax?
Useful Tax Websites
Visit the following websites for more information if you don’t know the answer to even one of the questions above:
*Deductions and what you can claim associated with running your business can be clarified by your accountant
or business advisor. Refer also to Australian Taxation Office.
Helpful Tax Guides for Freelancers and Small Businesses
In addition to the above links, why not order these helpful tax guides for free:
These guides will help you understand and manage your business tax responsibilities.
Log onto www.ato.gov.au and download these guides for free:
- Tax basics for small business (NAT 1908)
- Record keeping for small business (NAT 3029)
- GST for small business (NAT 3014)
- Income tax and deductions for small business (NAT 10710)
- Home-based business (NAT 10709)
GST Issues
If you anticipate that your annual turnover will be less than $50,000 you can choose whether or not
to register for GST. If you do not register then you do not collect it and you are unable to claim any
input tax credits. If you do not provide an ABN, businesses are required to withhold 48.5% of the
proceeds of any sales made to them.
For detailed and further information on any of these issues refer to the Australian Taxation Office.
Make Money Through Tax Concessions:
If your business turnover is less than $2 million a year, you could be eligible for a range
of tax concessions. For details on how you can benefit visit www.ato.gov.au/SBconcessions.
Capital Gains Tax Implications for Your Home Business
If you carry on a home-based business, you may have to pay capital gains tax (CGT) when you sell your home, even if:
- You have never claimed a deduction for any interest on money borrowed to buy your home.
- You owned your home outright before you started using any part of it to produce income.
- You have started a business from home but have not yet made a profit.
If you make a capital gain when you sell your home, you may not be entitled to the full main
residence exemption (that is, part of the gain may be taxable) if you:
- Acquired the home on or after 20 September 1985
- Used part of the home to produce income at some time during the period you owned it,
- Therefore would be entitled to deduct interest had you incurred it on money borrowed to buy the home. This is known as the interest deductibility test.
For further CGT information which may affect your home refer to Australian Taxation Office.
*Information gained from the Australian Government – Australian Taxation Office.
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