Taxation

For individuals, the ways to minimise tax can be split into two categories:

1. Reduce your tax assessable income.

The most common way people do this is with salary sacrificing arrangements. If your employer allows salary sacrificing, you can use this to make additional contributions to super, pay for car or other expenses with your pre-tax income. This reduces your taxable income.

2. Increase your deductions.

The main way people do this is with work related deductions. If you can argue a nexus between your employed work and an expense you incur, you can usually claim a deduction for it. For example, you can keep a log book for work related travel and claim this expense.

Donations to registered charities are also fully deductible.

Individual tax rates are marginal and they increase dependant on the level of income you receive as a wage. The individual tax rates can be found on the ATO website.

Company tax rates have just been revised by the federal government in the 2017/2018 budget. Companies with less than $10 million in turnover will be considered a small business entity and will be eligible for a 28.5 per cent tax rate in the 2017 income tax year, and a reduced rate of 27.5 per cent in the 2018 income tax year and beyond. These rates go into more detail at the ATO website.

Capital Gains Tax is the tax an individual or respective entity pays on the gain made from disposing of an asset. Your Capital Gain is the difference between the proceeds you receive and the cost base of your asset. The gain can be subject to a 50% discount if the asset has been held longer than 12 months. If the asset has not been held for 12 months there is no discount available.

Any business operator will need to consider registering for GST once they estimate that within any income tax year they will be exceeding $75,000 in annual turnover.

Most businesses lodge a Business Activity Statement (BAS) on a quarterly basis. Based on your annual turnover you may be required to lodge either an annual BAS, quarterly BAS, or monthly BAS.

FBT stands for Fringe Benefits Tax. FBT is a tax that employers incur when they provide certain benefits to their employees. FBT is separate to income tax and GST, and it is calculated on the taxable value of the fringe benefits which are provided.