Frequently asked questions
Frequently asked questions
Frequently asked questions
Frequently asked questions
Frequently asked questions
What business structure should I use?
This is a common question that can only be answered through a discussion with our advisers about your current and future goals. What may be appropriate today may be unsuitable for tomorrow, so sometimes business structures evolve over time. The standard structures are as follows: sole trader, partnership, company, trust or a combination of these structures. Each has their own pros and cons, and it is only through analysis of your circumstances that we can arrive at the appropriate recommendation.
What business structure will pay the least amount of tax?
This will depend on many factors, given the way in which income can be distributed between entities and individuals. In terms of headline rates, the figures are:
Companies – profit withheld in a company pays tax from 27.5%.
Trusts – generally pay no tax, as it is distributed to beneficiaries. The beneficiaries then pay at their own tax rate. However, if a trust is assessed on income, it will pay tax at the top personal rate of 49%.
Partnerships – like trusts, partnerships pay no income tax, as profits are distributed to the partners who pay at their respective tax rate.
Superannuation funds – taxable income is at a rate of 15%.
Individuals – we pay tax according to a progressive scale which varies between 0% to 45%, plus Medicare and other surcharges/levies (which can vary in different circumstances).
Can you help set up a business structure like a Company?
We can help set up companies, trusts, partnerships, business name registrations, ATO registrations such as the ABN, GST, PAYG withholding, and so on. We provide a complete business solution.
Can you help set up a Self Managed Super Fund (SMSF)
We are specialist advisers in SMSF’s, and we can manage every aspect from establishment through to audit.
How long does it take to register a new business structure for us?
Most business structures can be established the same business day, but the ATO has a 28 service standard for some registrations. Normally plan on 10 business days at a minimum to have all aspects from the structure, business name, and bank accounts established.
How can I arrange to start a new business?
The first aim is to meet with our advisers so we can understand your circumstances and goals. We can then recommend the right business structure and accounting method. We will then provide detailed guidance on the next steps to assist your business start up. Please call our Office to speak with one of our experienced business advisers.
Why does my Company have an ABN and an ACN?
The ABN (Australian Business Number) is issued by the ATO to all business entities. If an entity trades, it must register for an ABN, and then quote the ABN on all invoices. The ABN is a unique eleven digit number issued by the ATO. It may take up to 28 business days from date of application. We can help you apply for this number.
An Australian Company Number (ACN) is issued by the Australian Securities and Investments Commission (ASIC) to all new companies registered in Australia. It is a unique nine digit number, and it is specific to companies. You will note the last nine digits of the ABN are the same as the ACN – the first two digits of the ABN denote an industry classification.
Do I need to register a Business Name?
Generally, you will need to register a business name if you carry on a business or trade within Australia. Exceptions to this rule are as follows:
- if you are operating as an individual and your operating name is the same as your first name and surname
- if you are in a partnership and your operating name is the same as all of the partners’ names, or
- if you are an already registered Australian company and your operating name is the same as your company’s name.
What is a Business Name?
A business name is the name under which a person or entity conducts a business. Unless you have an exemption, you must register your business name on a national register. The business register allows third parties a means of formally identifying the trading entity they are dealing with.
What can I claim as a deduction?
The most established principle of tax law is that expenses can be claimed when there is a relevant connection to the earning of income. This principle holds true in most cases. However, our tax laws and ATO rulings add further complexity to this basis principle. Where you are unsure, this is where your tax accountant can provide further guidance.
Can I claim my car as a business expense?
This will vary according to the type of business you operate and your employment circumstances. For example, if you use a vehicle in the course of earning your income, via travel between places of work or the carriage of tools and equipment, this generally creates a tax deduction. However, travel from home to work is generally not deductible.
There are four main methods of claiming motor vehicle expenses, each with their own rules and methods for substantiation. We will provide advice on what best suits your circumstances.
What business records do I need to keep?
In summary, the ATO requires a high standard of record keeping. Our advice is to keep good records of all transactions, and to preferably use one or two business accounts which show the bulk of your transactions. The ATO also publishes very useful guides for your information, such as:
– Record keeping for small business (NAT 74242)
– Tax basics for small businesses (NAT 1908)
– GST (NAT 72420)
– How to set out tax invoices and invoices (NAT 11675)
What is the difference between BAS, PAYG and IAS?
A BAS (Business Activity Statement) is a form issued by the ATO (Australian Taxation Office) to all GST registered entities. The BAS allows these entities to report GST related activity for the period. It may also include a section for PAYG (Pay As You Go) instalments of tax. A PAYG income tax instalment is the ATO’s method of collecting this year’s predicted income tax for the individual, company or SMSF based on prior year tax liabilities. The BAS may also include a section to report wages paid and taxes withheld.
The IAS (Instalment Activity Statement) is the ATO’s method of collecting PAYG taxes withheld from employees of the trading entity, usually on a monthly basis. As mentioned, it also may be incorporated as part of the BAS, or it could be a standalone document.
Why have I been issued a PAYG and IAS statements?
The ATO requests this payment of more tax through the year because:
- you had untaxed income** from last year that created a tax liability.
(** untaxed income is typically bank interest, business earnings, capital gains, rent, partnership or trust distributions, dividend income, and so forth).
- the ATO assumes that you will have the same untaxed income this year, so they want to collect tax as you go (just as tax is deducted from employment income as you go).
- this tax is collected typically by quarterly instalments.
Why am I now having to pay these instalments? If you check your prior year tax return, you will have received untaxed income that created a tax bill – the ATO assumes the same for this year.
Why is the instalment figure so large? If you lodge later in the financial year (from Jan onwards), the ATO only has one or two quarters to collect all the current year’s ‘pay as you go’ – one quarterly figure may then be artificially high, but then less next quarter! Call if you are concerned.
Can I vary the PAYG? You can vary the amount up or down. If you vary down, but when you lodge you have outstanding tax to pay, the ATO can apply interest charges on the varied amount they did not receive – so care needs to be taken with variations!
What Should I Do?
- Lodge and Pay. In most instances you should pay the amount requested. In our experience, this is generally the best approach – you will always receive a credit for these payments in your next tax return lodgement, and you will not risk any other penalties.
- Vary the Payment. However, when your circumstances have changed significantly compared to the previous financial, then please call our Office to discuss a variation.
Do I need to be registered for GST?
Only trading entities that expect turnover of more than $75,000 per annum require to be registered for GST.
In some industries it is compulsive to be registered for GST such as Taxi/Uber businesses regardless of turnover. Please contact us for specific advice.
Do I have to include GST on invoices.
For all GST registered entities, you must include GST on all income and provide a tax invoice in a format acceptable to the ATO. This GST must be remitted to the ATO via a BAS, less any GST that you can claim for expenses. To substantiate GST claims, you must keep original invoices for a period of 5 years on receipts greater than $75.00.
What accounting software packages do you support and recommend?
Our office supports a variety of software packages across a range of industries. MYOB and XERO are market leading products, but QuickBooks, Reckon and Handisoft are other common packages that we utilise. Each product has their merits, and recommendations depend on your circumstances. Please speak to one our accountants for further advice.
Why should I choose your services as a Tax Accountant and Financial Advisor?
We will help you in many ways:
- We will maximise your tax refund by claiming your full entitlement to deductions.
- We stay current with tax law to ensure you access every tax break, offset, and benefit available to you.
- Our staff are fully qualified with such peak tax and accounting bodies as CPA Australia and the Institute of Chartered Accountants, and also have further post graduate qualifications in tax.
- We provide a complete business solution, from the right structure to reduce your tax and protect your assets, to advice on business administration and tax compliance.
- Through our financial advice we can help protect and grow your wealth. We have no alignment with banks or dealer groups – we work directly with you.
- We will proactively remind you of lodgement timeframes for tax returns and BAS to avoid ATO penalties.
- Our bookkeeping services will streamline your business administration and help implement the best accounting software for your needs.
- We will help you deal with the ATO to reduce the time and stress this can involve.
- As your tax agent, we can arrange for time extensions for tax payments for your BAS and income tax.
- We will help you budget for your taxes to ensure you are prepared for the year end.
- Our fees are tax deductible to you.
- With our advice we will help you remain safely within the ATO’s rules.
What are your office hours?
Spearwood and Success offices
We are open Monday to Friday, 8.30 am to 5:00 pm. Appointments can be made by phone or email. Appointments are notified the day before by SMS.
Tuesday and Thursday 9.00 am to 5.00 pm
Monday and Wednesday 9.00 am to 5.00 pm
What information do I bring to my appointment?
For existing clients, our annual guidance letter will provide all the necessary checks on information to bring to the appointment.
If you are a new client, a copy of last year’s tax return is always very helpful. Your full name, date of birth, and tax file number is required at a minimum, plus health insurance policies.
What records must I provide for my individual tax return?
Records you need to keep and provide include:
Payment summaries from employers, statements from your bank and other financial institution showing all transactions and interest, dividend statements from companies, summaries from managed investment funds, receipts or invoices for equipment or asset purchases and sales, receipts or invoices for expense claims and repairs, rental records. If your total claim for work-related expenses is $300 or more, you must have written evidence to prove your claims.
For capital purchases such as an investment property, shares or managed fund investment, start keeping records immediately because you may have to pay capital gains tax if you sell the asset in the future. Keeping records from the start will ensure you don’t pay more tax than necessary.
We cannot make it to the office during business hours, can you still process my tax?
We help many remote or time poor clients by phone and email, so your location is no barrier to our services.
Do you charge for phone calls?
No, we generally do not charge clients for calls to receive quick advice on minor matters. We would rather the client call and check with our accountants before they make decisions without advice. However, if the call relates to a more substantive matter, we will suggest making an appointment to clarify. If a phone call is lengthy and involves further follow up, then a fee may be incurred.
Can I have your fee deducted from my refund?
For clients with a tax refund, we can deduct our fee from the proceeds via our Trust Account. The balance of your refund will be paid to you by cheque. The fee for this service is $22, which covers the administrative time involved.
How long will it take to complete my tax return?
Individual tax returns will often be completed on the day of the appointment. For more complex individual and business returns, the appointment will help clarify any questions and the return will be processed later. The timeframe we aim for is 28 days from receipt of all information, but it can be a lesser time if it is required urgently. We will communicate with you to ensure we meet your expectations.