Small Business

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NSW Stamp Duty Calculator

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Taxman

Taxation www.ato.gov.au

This chapter identifies how to register your business for various taxes, how to meet your tax and superannuation obligations for your workers, record keeping obligations, and how to pay business taxes.

How to Register

Taxes Explained

Taxes and Superannuation for Your Workers

Record Keeping and Reporting

Paying your Taxes

How to Register

The ABN is a unique 11 digit identifying number that businesses use when dealing with other businesses. For example, you generally need to put your ABN on your invoices, or other documents relating to sales that you make. If you don't, other businesses may withhold 46.5% from any payment to you.

You also need an ABN in certain dealings with the Tax Office and other areas of government.

Registering for an ABN is not compulsory, but you will need one to register for the GST.

Your ABN allows you to:

facilitate a single Business Activity Statement

confirm your business identity to others when ordering and invoicing

avoid P.A.Y.G tax on payments you receive

claim GST credits

claim energy grants credits

obtain an Australian domain name.

What to do...

You can apply for an ABN on-line. At the same time you can also register for GST, P.A.Y.G withholding and T.F.N.

Contact the Business Infoline on 13 28 66.

F.B.T. is a tax payable by employers for benefits paid to an employee or the employee's associate in place of salary or wages. Examples of benefits include a car, car parking, low interest loan and payments of private expenses.

If you are an employer and provide fringe benefits to your employees, the Tax Office recommends that you register for FBT.

What to do...

See the Tax Office's Fringe Benefits essentials webpage.

You must register for GST if:

your business has a GST turnover of $75000 or more ($150000 or more for non profit organisations)

you provide taxi travel as part of your business, regardless of your GST turnover.

To register for GST you will need to complete an application form. If you wish to apply for an ABN at the same time, then use the same form.

Be aware that you need an Australian Business Number (ABN) to register for GST, as the ABN is part of the GST system. Your ABN will also be your GST registration number.

What to do...

See the Tax Office information about GST for small business.

Phone 1300 720 092 to request a copy of the Add a new business account form to complete.

Go through your tax agent.

A TFN is a unique number issued by the Tax Office to individuals and organisations.

Partnerships, companies and trusts need their own T.F.N. A T.F.N. can be obtained at the same time as an ABN, using the same application form. Sole traders use their individual TFN in dealings with the Tax Office.

Some of the main reasons for having a TFN are:

to quote to employers (this applies to individuals only)

to quote to investment bodies responsible for paying interest, dividends and unit trust distributions

to quote to government bodies, for example the Tax Office, when applying for an Australian Business Number (ABN) or lodging income tax returns.

What to do...

Contact the Tax Office on 13 28 66.

If you are a partnership, trust or company, you can apply for a TFN at the same time as your ABN, on the Australian Business Register website.

If you are an individual, visit the Tax file number application or enquiry for an individual page.

Capital Gains Tax

Capital Gains Tax (C.G.T.) is the tax that you pay on any capital gain you include on your annual income tax return. It is not a separate tax, merely a component of your income tax.

You make a capital gain or capital loss if a CGT event happens. Examples of a CGT event are when:

you sell or give away an asset to someone else

an asset you own is lost or destroyed

shares you own are cancelled, surrendered or redeemed

you stop being an Australian resident

a company makes a payment (not a dividend to you as a shareholder).

If your home is a place of business, there may be capital gains tax implications when you come to sell your home.

What to do...

Read the Tax Office C.G.T. essentials.

Read about what tax applies if your home is the principal place of business.

Excise duties

Excise duty is a tax levied on certain types of goods produced or manufactured in Australia. The goods on which excise duty is imposed are called excisable goods. Excisable goods include alcohol, petroleum, tobacco and coal.

You have to be registered with the Tax Office before you can be licensed to:

produce, store, deal in or manufacture excisable goods

move excisable goods under bond (that is, excisable goods on which duty has not been paid)

lodge returns and claims.

If you wish to undertake an excise activity, then you need to apply for the licence relating to that activity.

What to do...

Information on excise.

Read detailed information on the registration and licensing of alcohol, tobacco, petroleum and alternative fuels.

Fringe Benefits Tax

Fringe Benefits Tax (F.B.T) is a tax payable by employers for benefits paid to an employee or the employee's associate. FBT is separate from income tax and is based on the taxable value of the various benefits provided.

If your business provides fringe benefits to employees then you need to:

calculate how much F.B.T. you have to pay

keep the necessary F.B.T. records

report fringe benefits on your employees' payment summaries

lodge a return and pay F.B.T. to the Tax Office

understand which benefits are exempt from F.B.T.

What to do...

See our Register for FBT topic for information about registration.

Goods & Services Tax

The Goods and Services Tax (GST) is a broad-based tax of 10 per cent on the sale of most goods and services and other things in Australia.

You must register for GST if:

your business has a GST turnover of $75 000 or more ($150 000 or more for non profit organisations)

you provide taxi travel as part of your business, regardless of your GST turnover.

By registering for GST, you will be entitled to claim input tax credits for the GST included in the price paid for things that you acquire for use in your business. If you are not registered, you will not be able to claim input tax credits.

To register for GST you will need to complete an application. You use the same application to register for an Australian Business Number (ABN). You will need an ABN to be part of the GST system. Your ABN will also be your GST registration number.

What to do...

phone 1300 720 092 to request a copy of the Add a new business account form to complete, or through your tax agent.

Income tax for business

Federal income tax is levied on the taxable income of a person or a business. It is calculated on assessable income less any allowable deductions.

Assessable income is generally income your business earns - it does not include GST payable on sales you make, or GST credits.

Allowable deductions are deductions for certain expenses that you necessarily incur in relation to your business.

You must lodge an income tax return for any year in which you carry on a business, even if you expect to have no tax liability.

What to do...

See the Tax Office Income tax for business essentials for information about income tax.

International tax

Residents and non-residents have different tax rates.

A taxpayer who is a resident of Australia for income tax purposes is liable to tax on a worldwide income.

Non-residents are liable to tax only on income derived from Australian sources.

Whether you are a resident or non-resident of Australia for income tax purposes depends on your business entity.

What to do...

See the Tax Office's International Tax about tax issues for resident and non-residents.

Land tax

Land tax is an annual state government tax payable by the owner of land. Land tax is imposed in all states and the ACT, but not in the Northern Territory. The money raised is used to provide essential services to the community.

Each state and territory is responsible for administering its own land tax laws. The laws between states are comparable, apart from some variations.

The amount of land tax you pay is calculated on the basis of the combined unimproved value of taxable property you own. Your principal place of residence is generally exempt from land tax. Land owned and used by certain types of organisations may be exempt from land tax.

What to do...

Find out about land tax and exemptions in your state or territory (please note - no land tax exists in the Northern Territory).

Pay As You Go (P.A.Y.G.) withholding

Pay As You Go (P.A.Y.G.) withholding is a legal requirement to withhold amounts for income tax purposes.

If you have employees, you're required to withhold tax from payments you make to them. You may have to withhold tax from payments to other workers, such as contract workers. As a new employer, you must register with the Tax Office before you withhold from payments to your employees.

You may also need to withhold an amount from payments to other businesses if they don't quote their ABN to you on an invoice or other document if required.

You must send all withheld amounts to the Tax Office.

What to do...

From the Tax Office website:

read the Quick guide to PAYG withholding for business

To register for PAYG withholding:

use the same form that the you use when you apply for an ABN, or

phone 13 28 66 (you will need to have your ABN or tax file number to register over the phone), or phone 1300 720 092 to request a copy of the Add a new business account form to complete.

Pay-roll tax

Pay-roll tax is a state tax on the wages paid by employers. It is calculated on the amount of wages you pay per month. You must pay pay-roll tax if your total Australian wages exceed the exemption threshold that applies in your state or territory - exemption thresholds vary between states.

What to do...

You must register for pay-roll tax in your state or territory. Check with the Revenue Office in your state or territory for the pay-roll tax rate and threshold that applies to you.

ACT Revenue Office

NSW Office of State Revenue

Northern Territory Revenue

Qld Office of State Revenue

Revenue SA

TAS State Revenue Office

VIC State Revenue Office

WA Office of State Revenue

Rates

Rates are property taxes charged by local government on properties in their municipal area.

Rates can cover the payment of a range of services including the running of the Council, roads, bridges, kerbing, parks and gardens, immunisation, libraries, community activities, tree planting and pest eradication.

The price, method of valuation and timing of rates payments is variable across councils. How much you pay depends on the value of your property.

What to do...

Local councils Lookup.

Stamp duty

State and territory governments impose taxes on a range of paper and electronic transactions. These taxes are variable across state and territories, and can be called stamp duty, transfer duty or general duty.

Taxable transactions include:

motor vehicle registration and transfer

insurance policies

leases and mortgages

hire purchase agreements

transfers of property (such as businesses, real estate or shares).

What to do...

Find out more information about duties that apply to your business transactions in your state or territory:

ACT Revenue - Duties

NSW Office of State Revenue - Duties

NT Territory Revenue - Stamp Duty

QLD Office of State Revenue - Duties

RevenueSA - Stamp Duty

TAS State Revenue Office - Duty

VIC State Revenue Office - Duties Act

WA Office of State Revenue - Stamp Duty

Tax concessions for small business entities

From 1 July 2007 eligible small business entities can access a number of tax concessions in the following areas:

Capital Gains Tax (CGT)

Income tax

Goods and Services Tax (GST)

Pay As You Go (PAYG) instalments

Fringe Benefits Tax (FBT).

To be eligible you must meet the following conditions:

you are an individual, partnership, company or trust

you are carrying on a business

you have an aggregated turnover of less than $2 million.

You will have to check if you qualify for the concessions each tax year. Additional conditions may apply to certain concessions.

The benefits of the concessions include:

a choice to account for GST on a cash basis

simplified trading stock rules

simpler depreciation rules

immediate deductions for certain prepaid business expenses.

Some of the small business concessions were previously available under the Simplified Tax System (STS). If you were in the STS you can continue to use the concessions if you meet the eligibility requirements.

Entrepreneurs' Tax Offset (E.T.O.)

If you are a small business entity and have an aggregated turnover of $50 000 or less, then you will be eligible for an ETO of 25% of the tax payable on your business income. The offset phases out when your aggregated turnover is greater than $50 000 and ceases once your turnover reaches $75 000.

What to do...

Find out more about the Small business entity concessions.

Find out more about the Entrepreneurs' tax offset.

Find out more about the Changes to the Simplified Tax System.

Contact the Tax Office on 13 28 66.

Find out if you are eligible for the Small business entity concessions.

Find out if you are eligible for an Entrepreneurs' tax offset. ^[1]

Taxes and Superannuation for Your Workers

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Determine the status of workers

The status of your workers for tax purposes is important, as employees and contract workers involve different obligations.

An employee is a worker you employ in your business - you generally have to withhold tax from payments you make to them.

A contract worker is a worker who is self-employed and has a contract with you to provide services. You don't have to withhold tax from payments to them, unless you enter into a voluntary agreement with them.

What to do...

Go to the Tax Office website to help you determine if your workers are employees or contract workers.

Use the Employer obligations checklist to find out what you need to do when a new worker starts, during employment or when a worker leaves.

Find out if an apprentice is an employee.

Read about voluntary agreements with contract workers.

Fringe Benefits Tax

Fringe Benefits Tax (FBT) is a tax payable by employers for benefits paid to an employee or the employee's associate. FBT is separate from income tax and is based on the taxable value of the various benefits provided.

If your business provides fringe benefits to employees then you need to:

calculate how much F.B.T. you have to pay

keep the necessary F.B.T. records

report fringe benefits on your employees' payment summaries

lodge a return and pay F.B.T. to the Tax Office

understand which benefits are exempt from F.B.T.

What to do...

See our Register for FBT topic for information about registration.

Read about Fringe Benefits Tax for small business and Fringe Benefits essentials on the Tax Office's website.

Complete the Application for registration-fringe benefits tax and send it to the Tax Office.

Pay As You Go (PAYG) withholding

Pay As You Go (PAYG) withholding is a legal requirement to withhold amounts for income tax purposes.

You may also need to withhold an amount from payments to other businesses if they don't quote their ABN to you on an invoice or other document if required.

You must send all withheld amounts to the Tax Office.

What to do...

From the Tax Office website:

read the Quick guide to PAYG withholding for business

find out more about PAYG withholding essentials

read the No ABN withholding - questions and answers.

use the Tax Withheld Calculator to calculate the amount you need to withhold from your employees and other workers.

To register for PAYG withholding:

use the same form that the you use when you apply for an ABN, or

phone 13 28 66 (you will need to have your ABN or tax file number to register over the phone), or phone 1300 720 092 to request a copy of the Add a new business account form to complete.

Pay-roll tax

Payroll tax

Extension of time to pay your December payroll tax return

The due date for payment of the December return has been extended to Thursday 14 January 2010.

When are wages liable? (new nexus provisions)

From 1 July 2009 the process of determining liability for payroll tax has been changed to specify the employee’s principal place of residence as the primary nexus where employees perform services in more than one jurisdiction during a month.

When the employee does not have a principal place of residence in Australia, or where it cannot be identified, the employer’s ABN registered address will be used.

It is recognised that there may be transitional and implementation issues for some employers who may have to make changes to their payroll systems. In NSW, it is permissible for anyone facing such transitional issues to make any necessary adjustments without penalty as part of the annual reconciliation process for the 2009/10 assessment year.

It is stressed that these changes only affect wages for workers providing their services across jurisdictions. Where a worker provides their services solely in one jurisdiction, as is the case for the majority of workers, tax will continue to be paid to the jurisdiction where those services are performed.

More information

When are wages liable?

From 1 July 2009 to 30 June 2010 the threshold is $638,000

From 1 July 2009 to 31 December 2009 the rate is 5.75%

From 1 January 2010 to 30 June 2010 the rate is 5.65%

Employers, or a group of related businesses, whose total Australian wages exceed the current NSW monthly threshold, are required to pay NSW payroll tax.

Monthly threshold

28 days = $48,942

30 days = $52,438

31 days = $54,186

Each monthly payment or 'nil' remittance is due seven days after the end of each month or the next business day if the seventh day is a weekend or public holiday (ie August payment is due by 7 September). The annual reconciliation and payment or 'nil' remittance is due by 21 July.

What to do...

You must register for pay-roll tax in your state or territory. Check with the Revenue Office in your state or territory for the pay-roll tax rate and threshold that applies to you.

ACT Revenue Office

NSW Office of State Revenue

Northern Territory Revenue

Qld Office of State Revenue

Revenue SA

TAS State Revenue Office

VIC State Revenue Office

WA Office of State Revenue

Superannuation

Running a business or employing people is likely to involve superannuation obligations. Most of your employees, whether full-time, part-time or casual, will be covered by the superannuation guarantee legislation.

As an employer you are required to make superannuation guarantee contributions on behalf of your eligible employees at least once each quarter.

You need to pay super contributions at least four times a year, by the cut off dates each quarter: 28 October, 28 January, 28 April and 28 July.

You now need to:

Pay super contributions for your eligible employees by the cut off dates each quarter.

Pay at least the minimum 9% contribution amount of the earnings base (generally ordinary time earnings). From 1 July 2008 ordinary time earnings should always be used for each eligible employee.

Check if any of your employees are eligible for a choice of super fund.

Provide your eligible employees with a Standard choice form.

Pass on your employees' tax file numbers to their super fund within 14 days of receiving it (if you don't make contributions during that period, you can provide the tax file numbers when you make the contributions).

Pay super contributions for any eligible contractors.

Keep records of your super contribution payments and that you have offered your eligible employers choice of super fund.

If you don't make your superannuation contributions by the cut off dates you will face penalties.

What to do...

See the Tax Office's:

Superannuation information for employers or contact the superannuation information line on 13 10 20

Superannuation guarantee - a guide for employers on how to understand and meet your superannuation guarantee obligations.

Employer obligations checklist to find out what you need to do when a new worker starts, during employment or when a worker leaves.

Choice of Superannuation fund page for information on your employees' eligibility or for a copy of the standard choice form.

Use the Tax Office's:

Employee/contractor decision tool to work out if your worker is considered an employee or contractor for super purposes.

Superannuation guarantee eligibility decision tool to check if your employee is eligible for super contributions.

Superannuation guarantee contributions calculator to see how much super you should be paying for your eligible employees.

Record Keeping and Reporting

Record keeping

Good business records help you manage your business and make sound business decisions. They are also useful if you want to sell your business.

Under tax law, you must keep records to record and explain your business transactions. You're required to keep records relating to income tax, GST, payments to employees and business payments.

You can keep your records on paper or electronically. A variety of electronic record keeping packages are available. The Australian Tax Office (ATO) has tools and information to help, including e-Record, a free electronic record keeping

software product.

What to do...

Read record keeping essentials about paper and electronic record keeping and reporting.

Read the Australian Taxation Office's guide to Record keeping for small business.

Find out about e-Record, free record keeping software.

Use the Record keeping evaluation tool to decide what records you need to keep.

Reporting activity statements

You make payments and report your obligations under the tax system using an activity statement. The activity statement allows you to report your obligations for a range of taxes, including: