Frequently asking questions​

Company Tax Rate: A Relief for Base Rate Entities

Imagine the excitement of base rate entities in Australia when they learned that the company tax rate was reduced to 25% for FY2022 (from 1 July 2021 to 30 June 2022). It’s like receiving an unexpected gift! In FY2021, the company tax rate was 26%, so this reduction is a welcome change. The best part? This 25% rate will apply to the 2021-2022 and later income years.

Choosing the Perfect Business Structure

Setting up a business in Australia can feel like a daunting task, especially when you have to choose between sole traders, partnerships, trusts, or companies. It’s like picking your favorite flavor of ice cream – there’s no wrong answer, but each choice has its unique perks and quirks!

Tax Losses: The Silver Lining for Companies

Did you know that a company can carry forward tax losses indefinitely? It’s like having a secret stash of chocolate that never runs out! A company can use these tax losses when it wishes, provided it retains the same ownership and control. If you’re considering changing your company’s shareholding, don’t go it alone. Contact WISTAX, the leading CPA accountant in Inner West Sydney, Northern Beaches, and Adelaide, to receive sound advice.

Trusts: The Great Balancing Act

Managing a trust can be a delicate dance. While a trust doesn’t have to pay income tax on income distributed to beneficiaries, it does have to pay tax on undistributed income. It’s essential to ensure that income is correctly distributed to beneficiaries and to review your trust deed at least every three years. It’s like regularly checking your dance steps to make sure you’re still in sync with your partner.

Partnerships: Sharing the Load and the Liability

When it comes to partnerships, no tax is required, but a partnership must lodge a tax return annually. Income made by the partnership is distributed according to each partner’s agreed fixed portion. It’s like sharing a pizza with friends – everyone gets their fair share. But don’t forget, a partnership has unlimited joint liability, meaning that one partner carries the liability for the other partner. Choose your dance partner carefully!

Sole Traders: Going Solo with Responsibility

As a sole trader, you’re responsible for all the liabilities of the business. This means that all your personal assets are exposed. It’s like performing a high-wire act without a safety net. If you’re a sole trader, don’t take unnecessary risks. Contact one of our professional accountants in Inner West Sydney, Belrose Northern Beaches, and Adelaide, and we’ll help you find your footing.

Comparing Companies and Sole Traders: The Great Showdown

Companies and sole traders can feel like two different animals in the business world, with different legal, tax, and reporting obligations. A key difference between the two is that as a sole trader, you and your business are a single entity. Think of it like a one-person show, where you share the same tax file number (TFN) and Australian Business Number (ABN). A company, on the other hand, is like a full-fledged theater production, with its own TFN and ABN.

While a sole trader is subject to progressive tax rates which can be as high as 47.5%, company tax rates range from 27.5% to 30%. It’s like the difference between paying for a front-row ticket and a balcony seat. Companies also have more regulatory compliance requirements, such as keeping company funds separate from personal funds. Mixing these funds is like using the theater’s props for your personal use – it’s a no-no with different tax implications.

Maximizing Tax Refunds: The Art of Deduction

When it comes to tax refunds, the secret lies in how much tax has been withheld from your gross wages or assessable income. If the amount withheld is greater than what Australian tax law requires of your taxable income, you’ll be refunded the difference. At WISTAX, our mission is to ensure we maximize all legally entitled deductions, whether for work or investments, and therefore maximize your tax refund. It’s like finding hidden treasure in your tax return!

Protecting Your Tax File Number: Guard it with Your Life!

Your Tax File Number (TFN) is your personal reference number in the tax and superannuation systems, and it uniquely identifies you. It’s like having a backstage pass to your financial life, so keep it secure! Losing your TFN can be a disaster, so if it happens, contact your tax agent immediately to check for any suspicious activities on your tax account. At WISTAX, we’re here to help you safeguard your financial information and keep your tax account secure.

Superannuation Guarantee: The Road to 12%

In FY2022, the superannuation guarantee is 10%. It will rise to 10.5% in FY2023 and 11% in FY2024. By FY2028, it will reach 12%. It’s like watching a thrilling performance that keeps getting better and better with each act! Plan your financial future accordingly and enjoy the benefits of this steadily increasing superannuation guarantee.

Do I need to register for GST?

Under Australian taxation law, a business must register for GST when its turnover (gross income minus GST) reaches $75,000 and above. But don’t worry, we’re here to help you navigate these waters! 

What if my business is growing but is still below the $75K threshold?

Congratulations on your growing business! If you expect your turnover to exceed $75,000 in the coming 12 months, you should register for GST. However, if your sales are below $75,000 but you still want to register for GST, you can do so voluntarily. Just remember, it’s important to register for GST when your expected sales in the coming twelve months exceed the $75,000 threshold.

What if I fail to register for GST?

Uh-oh! If you’re required to register for GST but fail to do so, and you didn’t collect the GST for your customers, you may find yourself in hot water with the ATO. In this case, your business will be required to pay back the GST, along with a shortfall penalty and interest. But don’t worry, we’re here to help you avoid such situations. 

Can I register for GST if my turnover is below $75K?

Yes, you can. If you’re registered for GST and your turnover is below $75,000, you only need to lodge an Annual Business Activity Statement.

How often do I need to submit BAS statements? 

Here’s a quick rundown:

  • Annually when turnover is below $75,000
  • Quarterly when turnover exceeds $75,000
  • Monthly when turnover exceeds $20,000,000 

As a leading professional CPA accounting firm with offices in Ashfield, Sydney, and North Beach, Adelaide, we’re ready to get your business and tax affairs optimized. Ready to take the leap and let us handle your BAS? Call WISTAX today for an initial free 15-minute telephone consultation with John and his team on 1800 841 312