"Didn't I just pay tax?" is a question I get asked over and over again.
The answer can be "Yes, you actually need to pay 3 different taxes."
Let me break it down into three simple taxes:
1. GST
2. Company Tax
3. Personal Tax
GST - Goods and Services Tax (GST) is a 10% tax on most products and services sold in Australia. You need to register for GST if you business If you run a business has income/turnover of $75,000 or more or $150,000 for non-profit organisations or if you provide taxi travel or ride share.
For most businesses GST is calculated and lodged Quarterly.
How it works:
Income: $110.00 = $100.00 income + $10.00 GST (GST Account Total $10)
Income: $220.00 = $200.00 income + $20.00 GST (GST Account Total $30)
Total: $330.00 = $300.00 income + $30.00 GST
Expense: $99.00 = $90.00 expense + $9.00 GST (GST Account Total $21)
Expense: $88.00 = $80.00 expense + $8.00 GST (GST Account Total $13)
Total: $187.00 = $170.00 expenses + $17.00 GST
Profit and Loss
Income: $300.00
less Expenses: $170.00
Profit = $130.00
GST owed to ATO
GST Received $30.00
less GST Paid $17.00
GST Owed = $13.00
Company Tax: If your business is set up as a company the company will need to lodge a tax return. Company tax payable is 25% of profit. Based on the simplified example above tax payable would be $32.50. Speak with your accountant regarding this matter
Personal Tax: Every year individuals are required to submit a tax return. Depending on the amount of PAYG paid by your employer or paid by you to the ATO you may need to pay tax. Personal tax is paid on a grading scale.
There are different business structures that can impact your tax position. Speaking with your accountant regarding this matter.