Tax Facts

Simpler Depreciation

You can choose to use the simplified depreciation rules if you have a small business with an aggregated turnover (the total normal income of your business and that of any associated businesses) of less than:

$10 million from 1 July 2016 onwards
$2 million for previous income years

Simplified depreciation rules for small businesses include:

an instant asset write-off for assets that cost less than the relevant threshold
a general small business pool for assets that cost the same or more than the relevant threshold, which has simplified calculations to work out the depreciation deduction.

Capital Gains Tax

If you sell a capital asset, such as real estate or shares, you usually make a capital gain or a capital loss. This is the difference between what it cost you to acquire the asset and what you receive when you dispose of it.

You need to report capital gains and losses in your income tax return and pay tax on your capital gains. Although it's referred to as capital gains tax (CGT), this is actually part of your income tax, not a separate tax.

CGT Discount – foreign resident individuals

For assets acquired after 8 May 2012, the discount is generally not available to foreign and temporary resident individuals (including beneficiaries of trusts and partners in a partnership).

Division 293 tax – Super contributions for High Income Earners

Division 293 tax reduces the tax concession on super contributions for individuals with income greater than the Division 293 threshold.

Excise on alcohol

If your business manufactures, produces or stores excisable alcohol in Australia, this information will help you understand your alcohol excise obligations, including registration, licensing, lodgment, payment and record-keeping.

Fringe Benefits Tax

A fringe benefit is a 'payment' to an employee, but in a different form to salary or wages. Examples of fringe benefits include:

allowing an employee to use a work car for private purposes
giving an employee a discounted loan
paying an employee's gym membership
providing entertainment by way of free tickets to concerts
reimbursing an expense incurred by an employee, such as school fees
giving benefits under a salary sacrifice arrangement with an employee.

Fuel Tax Credits – business

Fuel tax credits provide businesses with a credit for the fuel tax (excise or customs duty) that's included in the price of fuel used in machinery, plant, equipment, heavy vehicles, light vehicles travelling off public roads or on private roads.

Good and Services Tax

Goods and services tax (GST) is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.

Franking Account

A franking account records the amount of tax paid that a franking entity can pass on to its members as a franking credit. Each entity that is, or has ever been, a corporate tax entity has a franking account.

Income Tax rates – Individual

These income tax rates show the amount of tax payable in every dollar for each income tax bracket depending on your circumstances. Find out about the tax rates for individual taxpayers who are:

Residents
Foreign residents
Children
Working holiday makers

Income Tax rates – Company

The full company tax rate is 30% and the lower company tax rate is 26% for financial year 2020/21.

Medicare Levy Surcharge

The Medicare levy surcharge (MLS) is levied on Australian taxpayers who do not have an appropriate level of private patient hospital cover and earn above a certain income.

MLS is designed to encourage individuals to take out private patient hospital cover and to use the private hospital system to reduce demand on the public Medicare system.

PAYG Instalments

By making regular payments (PAYG instalments) throughout the year you won't have to pay a large tax bill when you lodge your tax return.

Your payments are made based on your business and/or investment income (which is also known as instalment income). When you lodge your tax return, all the amounts you've paid during the year will be offset against any tax you owe for the year.

PAYG Withholding

As an employer, you have a role to play in helping your payees meet their end-of-year tax liabilities. You do this by collecting pay as you go (PAYG) withholding amounts from payments you make to:

your employees
other workers, such as contractors, that you have voluntary agreements with
businesses that don't quote their Australian business number (ABN).

Rental Property – ATO top 10 tips

Small Business Entity Concessions

Small businesses can access a range of concessions including payment and reporting options. This applies to sole traders, partnerships, companies or trusts. To qualify for these concessions, you'll need to determine if your business is a 'small business entity' for the income year. You must review your eligibility each year.

Taxable Payments Annual Report (TPAR)

If your business makes payments to contractors or subcontractors you may need to lodge a Taxable payments annual report (TPAR) by 28 August each year. You need to know about TPAR if your business provides any of the following services, even if it's just part of the services you provide each year:

Building and Construction services
Cleaning services
Courier services or road freight services
Information technology services
Security, investigation, or surveillance services
Government entities

Super Guarantee Eligibility Tool

Your not-for-profit organisation must provide its eligible employees with:

a minimum level of super contributions by the quarterly cut-off date, and
a choice of the super fund

If you fail to meet these obligations, your organisation will need to report this to us by lodging a Superannuation guarantee charge statement – quarterly, and pay the super guarantee charge (SGC).

Organisations that are income tax exempt are not exempt from the superannuation guarantee legislation.

Most employees, whether full-time, part-time or casual, are covered by the super guarantee legislation. Company directors, some artists, sportspeople and certain independent contractors are also covered.

Exceptions include employees who are:

paid less than $450 (before tax) in any calendar month (super does not have to be provided for that month)
non-residents paid solely for work undertaken outside Australia
under 18 years old and employed for no more than 30 hours per week.

Tax Payer Penalties

As an employer, you have a role to play in helping your payees meet their end-of-year tax liabilities. You do this by collecting pay as you go (PAYG) withholding amounts from payments you make to:

your employees
other workers, such as contractors, that you have voluntary agreements with
businesses that don't quote their Australian business number (ABN).

General interest charge

Shortfall interest charge

Failure to lodge on time penalty

Wine Equalisation Tax

If you make wine, import wine into Australia or sell it by wholesale, you'll generally have to account for wine equalisation tax (WET). WET is a tax of 29% of the wholesale value of the wine. It is generally only payable if you are registered or required to be registered for GST.

It's designed to be paid on the last wholesale sale of wine, which is usually between the wholesaler and retailer. WET may apply in other circumstances – such as cellar door sales or tastings – where there hasn't been a wholesale sale. WET is also payable on imports of wine (whether or not you are registered for GST).

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