Your Franchise Could Be Eligible For Tax Concessions – ATO Article
This article appeared in Issue 3#4 (May/June 2009) of Business Franchise Australia & New Zealand
With 30 June 2009 approaching, the ATO reminds small business owners about their lodgement responsibilities and possible tax benefits.
Sometimes it can be difficult to keep track of everything when you’re a small business owner or a franchisee. One of these is your tax obligations.
With tax time just around the corner, it is important to make sure you are up-to-date with your tax and superannuation responsibilities. It is also helpful to know what concessions your small business may be eligible for.
The Tax Office has some useful tools and information to help you understand these responsibilities and concessions and make it as easy as possible for you to comply.
Small business concessions – do you know what you’re entitled to?
As a small business owner, there are many concessions available to you throughout the year to help ease the burden at tax time.
Knowing what you are entitled to and how tax changes can help your business can make a big difference.
Small businesses and franchisees with less than $2 million turnover per year may be eligible for a range of tax concessions, including:
- choice to account for goods and services tax (GST) on a cash basis;
- choice to pay GST by instalments;
- annual apportionment of GST input tax credits;
- simpler trading stock rules;
- simpler depreciation rules;
- entrepreneurs tax offset;
- capital gains tax (CGT) 15-year asset exemption;
- CGT 50% active asset reduction;
- CGT retirement exemption;
- CGT roll-over provisions;
- fringe benefits tax car-parking concession;
- pay as you go instalments;
- two-year period for amending assessments (exceptions may apply); and
- immediate deductions for certain prepaid business expenses.
Eligible businesses can choose the concessions that best suit their needs, helping to reduce red tape and compliance costs.
Employing workers – what do I need to do?
When you make payments to employees or contractors, you may be required to withhold an amount and send it to us at regular intervals.
To find out more about your PAYG withholding obligations visit ato.gov.au/employers. You can also access our online decision tool to help you determine if your workers are employees or contractors.
As an employer, you generally have to pay superannuation to any employee who:
- is between 18 and 69 years of age
- you pay $450 (before tax) or more in a calendar month, and
- works full-time, part-time or on a casual basis.
You are required to pay a minimum of 9% of each employee’s ordinary time earnings, which is due at least once per financial quarter.
For more information or assistance go to ato.gov.au/employersuper or phone 13 10 20 between 8.00am and 6.00pm, Monday to Friday.
Fringe benefits tax
Fringe benefits tax (FBT) is a tax paid on certain benefits you provide to your employees or your employees’ associates (typically family members).
As an employer, you are required to pay FBT, even if the benefit is provided by an associate or by a third party under an arrangement with you.
We recommend you register for FBT as soon as you have established that you are required to pay it. Once you are registered, we can send you additional information to help you lodge your return.
For more information about fringe benefits tax, go to www.ato.gov.au/fbt or phone 13 28 66 between 8.00am and 6.00pm, Monday to Friday.
Entrepreneurs Tax Offset
The Entrepreneurs Tax Offset (ETO) is a concession available to businesses that may be starting out and is intended to reduce the amount of tax you are required to pay.
To be eligible for the ETO, your total turnover needs to be less than $75,000 for the year, but more than the deductions that directly relate to that turnover.
The offset is equal to 25% of the income tax payable on your business income if your total turnover is $50,000 or less. If your turnover is more than $50,000, the offset is phased out once your turnover reaches the $75,000 threshold.
To find out more on the Entrepreneurs Tax Offset, visit ato.gov.au
Small business assistance
To help make it even easier for you to comply, the Tax Office also provides a free customised assistance service. Visits are conducted at your request at your place of business or preferred location.
Whether you’re setting up a new business, making changes to an existing business or just need some business tax information, tax officers can help you understand your obligations. They can also help you set up and install useful programs, such as the Tax Office’s business portal and free record keeping software.
The confidential assistance visits can range from half an hour to half a day, depending on the information you would like to discuss. Visits are offered between 8am and 6pm weekdays and are available in all capital cities and most regional areas.
All assistance visits are covered by the Commissioner of Taxation’s guarantee. This means that they are educational in nature and the information you share is confidential and will not be used for any other purpose.
To register for a free visit go to www.ato.gov.au/Business/ or call 13 28 66.
One of the key ingredients to a successful business is good record keeping practices.
Good business records will help you manage your business, meet your tax obligations and make sound business decisions.
As well as saving you time and money, particularly at tax time, keeping appropriate records is required by law. General records that you need to keep include:
- income and sales records;
- expense or purchase records;
- records of payments to employees and to superannuation funds on their behalf;
- bank records;
- asset purchase records;
- contracts and agreements;
- year-end records; and
- minor deductible expenses.
The Tax Office has a number of programs available to help you keep good records, including the record keeping evaluation tool and e-Record.
The record keeping evaluation tool is a free, interactive software program that will help you understand what records you need to keep and evaluate whether your record keeping practices are adequate.
The program will provide a list of records tailored specifically for your business, a report on how well the business is keeping its records, as well as suggested improvements.
e-Record is another free electronic record keeping product which can help you meet your tax reporting obligations.
e-Record enables you to easily record your business transactions, prepare tax invoices and submit payment summaries electronically. You can also lodge your activity statement online, and monitor your cash flow.
The record keeping evaluation tool and e-Record can be downloaded from the Tax Office website ato.gov.au or you can order a CD by calling 1300 139 051.
Don’t forget the Tax Office has benchmarks for the cash economy relating to certain industries that could assist you during tax time.
The benchmarks indicate an expected range of income for businesses working directly with household consumers, and are available for the following industries:
- floor sanding and polishing;
- metal roofing;
- roof guttering;
- roof tiling;
- taxis; and
- timber floor installation.
If you would like more information on industry benchmarks, go to ato.gov.au or call the Tax Office on 13 28 66.
Your small business tax calendar
You can personalise a free electronic calendar from the Tax Office to help you better manage key dates for your tax lodgements and payments.
Answer some simple questions about your business and Tax Calendar records your due dates for the year and can generate reminders for you. You can also:
- record personal notes and reminders, such as appointments
- update the calendar if your business structure or reporting obligations change, and
- print a one-page yearly planner for your tax obligations and due dates.
Get the latest version of Tax Calendar at the start of each financial year from www.ato.gov.au/TaxCalendar or order a CD by calling 1300 720 092.
Key dates for the remainder of the 2008-09 financial year
Business Activity Statement
- April monthly activity statement due 21 May 2009
- May monthly activity statement due 21 June 2009
Fringe Benefits Tax (FBT)
- FBT return and payment due 21 May 2009
Superannuation guarantee charge statement
If you missed the quarterly super guarantee deadline, you need to lodge a statement
- Quarter three (January – March) due: 28 May 2009
End of the 2008-09 financial year 30 June 2009
Bushfire and flood affected businesses
If you have been affected by the recent bushfires or floods, you are entitled to some extended lodgement dates. Visit ato.gov.au for more information.