The Complete Guide to Australian Small Business Taxes

Running a business is hard enough, but small business taxes? That's a whole other headache. Learn how to file taxes stress-free here.

Would you like to learn more about small business taxes in Australia? You’ll find hidden and often overlooked details in those laws if you know where to look. And it’s those hidden gems that might change the way you do business.
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Read on to discover the most critical tax laws for small businesses, so you can avoid penalties and increase your bottom line this year.

Federal Tax Authority

The Australian Taxation Office (ATO) oversees the collection of federal taxes. These include income taxes, capital gains taxes, and goods and services taxes. They also set the federal tax rates.
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They also offer tax toolkits and other support for small business tax preparation. Outside of the ATO, each Australian state and territory also has an oversight committee. Check with your local state or territory to discuss their small business tax filing system and small business tax form, as each is slightly different.

International Small Business Taxes

If you run an international business, you have a few additional things to think about besides bookkeeping tips.
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• Transfer pricing rules
• Multinational anti-avoidance law
• Multilateral treaty to prevent BEPS
• Managed investment trusts
• Withholding tax
• Thin capitalization
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Oh, and don’t forget about the diverted profits tax. It’s a new law that limits your small business tax deductions by diverting overseas profits for significant global entities. In other words, it levies the diverted profits of large global businesses.

Direct Taxes

This is where the bulk of your taxes will come from. Direct taxes are those paid by a taxpayer to the Australian government as opposed to indirect taxes which can be transferred to other parties, such as consumers.

Corporate income tax: this general income tax runs at 30% though some folks may qualify for small business tax credit and reduced rates. The system is usually set up in a pay as you go, or quarterly plan.

Capital gains tax: this comes from the discarding of capital assets, though foreigners are usually taxed only on physical property. A net loss in this category can carry forward to offset future gains.
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Other considerations include imputation systems, tax consolidation, and different types of consolidation groups, including administration and multiple entries.

Indirect Taxes

If you live in another country, it might feel as if the Australian government takes all your hard-won income through taxes. But there are ways to reduce your costs, Diverse Accounting Services offer tier-one accounting at an affordable price. But paying for accounting is only the tip of the iceberg.
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You also need to pay special heed to your goods and services taxes (GST). They make or break small businesses like yours. They’re imposed by Australia’s federal government at a rate of 10%.

It’s paid by suppliers, like a value-added tax in other countries. And it comes in many forms.

• Supplies
• Groups
• Cross-border supplies
• Resident agents
• Reverse charged supplies
  
  

The key is to pay special attention to how much money is going out. Do your best to limit expenditures and use only what you need.

What’s Next?

Now that you have a better grasp of small business taxes in Australia, you can see the complexity of the system. Most small business owners can prepare their own taxes but seek out expert help instead. It ensures these businesses don’t miss out on hidden tax breaks.

​If you have additional questions speak to Mike from Diverse Accounting Services to discuss your accounting needs.