Australia introduced a new tax system on July 1st 2000. This consists of a Goods and Service Tax (GST) and a Pay As You Go tax (PAYG) which includes:
Who has to have an ABN?
Businesses that turnover in excess of $50,000 annually ($100,000 if the business is a ‘not for profit’) must register for GST and ABN.
Businesses earning less than the threshold can apply for an ABN without registering for GST. This ensures that 48.5% withholding tax is not deducted from the businesses
Statement of supplier
If a business has not registered for an ABN, but still carries on some ‘business to business’ (B2B) transactions, there is a ‘Statement by Supplier’ form available. The completion of this form ensures that the 48.5% withholding tax does not occur.
The supplier ticks a box on the form to say that:
The business receiving the statement must keep them on file for 5 years.
A business (that is registered for GST) elects to complete the BAS either monthly or quarterly. Either the business operator or a registered tax agent can complete the BAS.
However, any refunds on GST owing will first be applied to any other taxes the business may owe to the ATO eg. PAYG
The Alienation of Personal Service Income also became law on July 1st 2000. If you provide a service, even if you are a registered company, partnership or trust, you will be taxed as an employee and cannot make business claims. This applies if you do 80% of your work for one client and work from a home base. It does not apply if you employ others to do the work for you or if you work from a commercial property.
You can seek a determination from the Commissioner, but he/she will normally consider the employment and business premise tests before making a decision.
The new Non-commercial Losses legislation (July 1st 2000) states that if you earn less than $20,000 a year from the business, but you and/or a partner earns more than $40,000 annually, you cannot offset business losses against the income earnt.
To make it easier for the
1. Cash versus Accrual
This will give businesses the choice of using a cash method of accounts rather than accrual, making income only recognised when it is received.
Depreciable assets of less than $20,000 will be immediately deductible and it will no longer be necessary to calculate depreciation separately for each asset.