Business Accounting And Tax In Australia

Business Accounting And Tax In Australia
The tax system in Australia is very similar to that of the United Kingdom, and the country operates within the framework of the OECD member countries.

When establishing a business there are several structures to consider as follows;

1) Sole Trader; is the quickest and easiest means to get set up, but it has its limitations in the long run, particularly if the business grows. The individual has no legal protection since the business is not a separate entity.

2) Partnership; is step further, in essence a sole trader comprising of more than one person. As such there isn't necessarily a separate entity so there remains no legal protection from bankruptcy and other claims. Partnerships can even be verbal, and certainly informal. They are not subject to corporate law and not obliged to submit audited accounting records to the revenue services. They are easy to set up and just as easy to dissolve but place the individual at risk.

3) Company; a separate legal entity to its owners, directors and employees, who have limited liability. This structure should have recorded share capital, a director/s and secretary. Public companies needn't be discussed here, but the private company doesn't need auditing. However, it must submit annual accounts to the tax office. Corporate tax of 30 per cent on profits apply and there are more obligations to staff, creditors and share-holders or partners, in terms of legal documentation.

4) Trusts; this is an option for those with wealth to manage and not necessarily deriving further income or building a business per se. The trust holds assets on behalf of beneficiaries or a group. Three general trust structures exist;
a) Unit Trusts; where profits are delivered to 'unit holders' who are then taxed. It is not a legal taxable entity on its own.
b) Discretionary Trusts; differs in that a board of trustees, or single trustee, disperses profits at their discretion, and the beneficiaries pay taxes. Again, the trust is not a legal entity.
c) A Hybrid Trust; is a combination of the two.

The Company governing body in Australia where registration takes place is Australian Securities and Investment Commission (ASIC). Certain details such as ownership details, share arrangements, management/directors and place of registered office, along with personal details of nominated directors needs to be disclosed. The minimum annual fee (2011), is $212.

Sydney GPO Box 5360 Sydney NSW 2001
Level 32, 1 Market Street Sydney NSW, 2000
Tel: +61 2 9299 8666, fax: +61 02 9299 6636
email [email protected]

Brisbane GPO Box 1092 Brisbane QLD 4001
Level 22, 127 Creek Street Brisbane QLD, 4000
Tel +61 07 3218 2134 fax: +61 07 3218 7377

The tax year runs from 1 July to 30 June each year. All taxpayers are required to lodge an income tax return with the ATO.

Taxable income (in AS$)
0 - 6,000 nil
6,001 – 35,000: 15% of excess over 6,000
35,001 – 80,000: 4,350+ 30% of excess over 35,000
80,001 – 180,000: 17,850 + 38% of excess over 80,000
180,000+: 55,850 + 45%

Non Residents;
0 - 35,000: 29%
35,001 - 80,000: 10,150 + 30% of excess over 35,000
80,001 – 180,000: 000 23,650 + 38% of excess over 80,000
180,000 +: 61,650 + 45% of excess over 180,000

Goods and Services Tax Goods and Services Tax (GST) is 10% charged on all taxable supplies.