Are you running a business in Victoria, and have you hired employees? If your answer is yes, you should know about payroll tax regulations in Victoria.
Have you ever questioned whether the payroll tax includes superannuation? Then you are not alone. Most business owners question whether to include superannuation contributions when calculating payroll tax.
This article will help you to understand whether to include superannuation contributions when calculating your payroll tax liability.
What is a payroll tax?
Before finding whether payroll tax includes superannuation, let’s find out what payroll tax is. This is a tax imposed on the total wages paid by the employer or the business to its employees or contractors. A payroll tax must be paid by every employer who passes the specified wage threshold (discussed later).
This is a state-regulated tax. Therefore it will be managed and collected by different authorities in each state. The State Revenue Office (SRO) manages Victoria’s payroll tax on the Victorian Government’s behalf.
The State Governments have worked together to make the regulations similar across the country, although the tax rates could differ. The current payroll tax rate in Victoria is at 1.2125%
What should be included in calculating payroll tax
The payroll tax will be imposed on the wages paid by the employer to their employees. However, when talking about wages, it is not the salaries paid alone. Along with the salaries, there are various components to consider when calculating the total wages. These components are
- Salaries and wages
- Fringe benefits
- Employer superannuation contributions
- Payments to contractors etc.
All of this should be added up together when deriving the final figure for the wages paid to the employees.
Read more: SRO
Does payroll tax include superannuation?
Yes, payroll tax includes superannuation. However, only the superannuation contributions made by the employer will be considered for payroll tax.
You should pay payroll tax on superannuation contributions (including non-monetary contributions) payable or paid in respect of:
1. Employees – Superannuation contributions made by the employer on behalf of the employee.
2. Deemed employees – Certain individuals or parties will be considered employees for payroll taxes. These include:
∙ A contractor who does work concerning a service provided to another person under a particular contract.
∙ A service provider who does work concerning a service provided to a client under an employment agency contract.
3. Company Directors – The superannuation contributions made to a company director irrespective of whether the director is a non-working or a working director. 4. Non-monetary super contributions – Non-monetary employer-funded super contributions are liable for payroll tax. The said taxable value will be the agreed value or the value attributed to the contribution, whichever is greater.
Read more: SRO
Should every business pay payroll tax?
Payroll tax is another common tax that many businesses should pay in Australia. However, the Victorian Government has specified a threshold to pay the payroll taxes.
As said before, the payroll tax liability will be calculated on the total wages paid by the business. This wage component includes various payments, including super contributions made to employees or contractors. You should pay payroll tax if the total wages paid to these individuals exceed $700,000 per year or $58,333 per month.
If the total wages paid are below this threshold, then you don’t have a payroll tax liability. However, these values can change from time to time. So, it would help if you stay updated.
As we said before, calculating and paying your exact tax liability is crucial to avoid legal issues and financial losses. For example, you should include all the wage components when calculating the payroll tax liability of the business.
That also includes super contributions made by the employer to the employees, contractors, and directors. It is crucial maintain proper records and calculate the tax liabilities if you exceed the threshold.
This can be a hectic process. That is why SPS Consultants are stepping in to help you. We have tailor-made packages designed according to the specific needs of your business. Our expert team has helped hundreds of clients to manage their tax liabilities and pay them on time over the years. Don’t hesitate to contact our team to schedule a consultation session.
Do small businesses need to pay taxes in Australia? Dealing with tax laws can be quite a complicated task. However, you should obey the rules in the country or the state and comply with the regulations.
That is why you should precisely know what kind of taxes should a small business pay. In this article, we will briefly overview the different kinds of taxes a small business has to pay in Australia. If you are running a small business, make sure to read until the end to get valuable insights.
What are small businesses?
Most people think only sole proprietorships and partnerships are considered small businesses. However, that is not the case. Not only sole proprietorships and partnerships but companies and trusts can also be considered small businesses.
There are different methods to decide whether a business is a small business. These methods are:
- The previous year’s turnover is less than $10 million
- The current year’s turnover is estimated to be less than $10 million
- The actual income of the current year is less than $10 million
Read more: ATO
What kind of taxes should small businesses pay
There are various taxes applicable to businesses in Australia. Some of these taxes are regulated by the state governments. The state-regulated tax laws can be different from one state to another, while country-wide regulations would remain constant.
Here are some of the basic taxes in Australia applicable to small businesses.
Talking about income tax can be quite a complicated topic. This is a tax imposed on the income earned by the businesses. Generally, it is imposed on taxable income. The taxable income is derived by deducting allowable expenses from assessable income.
The income tax rate would depend on the structure of your business. Even if your business falls into the small business category, the tax rate will change among different structures.
If you are a sole trader or a partnership, you must lodge the tax returns under individual tax rates. And the threshold to pay individual tax returns is when the taxable income is more than $18200.
Read more: Individual tax rates (ATO)
If you run a company, there is no tax-free threshold. A small and medium scaled company should pay 25% as taxes from the taxable income. The rate was amended in 2022, whereas it was 26% in 2020/2021.
So like we said before, this is a highly complex topic that few words cannot describe. However, you should know the basics of income tax applicable to your small business. These rates would stay constant country-wide.
Capital gains tax (CGT)
What is the most straightforward way to make a capital gain? It is by selling an asset. Yes, you have to pay a tax when you make a profit by selling an asset.
However, there is good news for small businesses. The Australian Government gives various concessions to reduce the CGT liability of a small business.
For example, you can reduce the capital gain by 50% if you have owned the asset for two years or more. Likewise, there are various CGT concessions. Read more about them from here.
Read more: CGT(ATO)
Goods and services tax (GST)
This is a tax charged on goods and services offered by the business. The current GST rate is at 10% country-wide.
If you have a business that earns a GST turnover of more than $75,000 per year, then you should register for GST.
However, there are certain benefits of registering for GST even if your business doesn’t exceed
this threshold. One such benefit is the ability to claim GST credits.
If you are not registered for GST, you cannot charge GST from your customers. However, you should still pay GST for the goods and services you obtain from a GST-registered business. You cannot claim these GST payments if you are not registered.
This is another tax that small businesses should pay if they employ individuals. This is a state tax, and its regulations can change from one state to another. For this article, we will consider the State of Victoria.
The State Revenue Office in Victoria collects this tax. You should pay taxes as the employer on the wages you pay in Victoria. The payroll tax rate in Victoria is 1.2125% at the moment.
The current annual tax-free wage threshold is $700,000, while the monthly threshold is $58,333. When calculating the wages paid, you should consider the following payments too.
- Employer (pre-tax) super contribution etc.
Read more: State Revenue Office
As we said before, this is not a simple topic. There are various criteria and regulations to consider when deciding your tax liability as a small business.
However, there are four basic taxes applicable to a small business. They are income or business tax, capital gains tax, goods and services tax, and payroll tax. There are various concessions and exemptions for small businesses by the Australian Government and each State Government.
Therefore you should know about these conditions when calculating your tax liability. We know it can be quite difficult for you to do it alone. That is why SPS consultants have designed tailor- made packages to help your business with tax accounting.
Our expert team has helped many clients in Narre Warren, and Melbourne. We have expanded our services to various locations in Victoria. We can help you to do your taxes accurately and take this burden away from your shoulders. Don’t hesitate to contact us today to schedule a consultation session.
Does taxable income include GST (goods and services tax)? This is one of the most common questions faced by many new business.
You should calculate your taxes accurately to avoid legal issues and minimize financial losses. When calculating taxes, it is crucial to calculate your taxable income.
Therefore you should know precisely whether to include GST in your taxable income. This article will give you a brief insight into taxable income and whether you should include GST in the taxable income.
What is taxable income?
Taxable income is the income of your business that would be considered for tax purposes. The taxable income is the final figure derived after deducting allowable expenses from the assessable income.
Taxable income = Assessable income – Allowable deductions
Assessable income is the income earned from day-to-day operations and sales of the business. These incomes can be investments, commissions, and compensation payments that are received as a part of your business activities.
Further, you should include income related to the business but not earned as a part of daily business activities. These incomes can be the disposal of a non-trading stock asset, business prizes and awards, payments from insurance claims, etc.
Therefore most of the business-related incomes should be declared as assessable income. However, the accounting method you follow (accrual or cash basis) will determine which amounts are to be included under assessable income.
You can deduct certain expenses from this assessable income to calculate the taxable income. These expenses should be directly related to earning your assessable income.
Read more: Assessable income (ATO), Allowable deductions (ATO), Taxable income (ATO)
What is GST
As you already know, GST is the abbreviation for goods and services tax. Currently, the GST is at 10% on most goods and services in Australia.
So how does GST affect the income and expenses of a business? If the business is registered for GST and sells a good or a service, then the business would have to charge GST from the customers. Therefore the sales value would include the GST too.
On the other hand, if the business obtains goods and services that already have a GST, these expenses would include the tax. Thereby increasing the face value of that particular expense.
The business has to pay the government the GST collected from its customers. The business can also claim the GST paid to obtain goods and services
Does taxable income include GST?
Now that you have a brief understanding of GST and taxable income let’s find out whether taxable income includes GST.
GST will increase the face value of incomes and expenses of your business. The tax regulations specify that if an income or expense of a business contains a GST portion, it should be omitted when calculating the taxable income.
Therefore taxable income should not contain GST.
Why is GST not included in the taxable income
As said before, GST will increase the face value of your income and expenditure. However, that increased portion doesn’t belong to your business. It belongs to the government.
Further, if the GST is included in your taxable income, the GST component will be taxed again for income taxes.
That is why the general tax law specify that GST should not be included in taxable income.
Taxable income is the net income of a business on which you will calculate the tax liability. Therefore you should declare it accurately as possible to avoid legal issues and minimize financial losses.
When declaring the taxable income, don’t include the GST components. It could overstate or understate your actual tax liability.
Calculating the actual tax liability can be quite a complicated process. You should maintain your books properly and take maximum advantage of business tax deductions. If you need help with your taxes, then hiring a qualified tax agent is better.
SPS Consultants are professional tax agents in Narre Warren, and Melbourne. Over the years, we have helped hundreds of clients to manage their taxes and get the maximum out of tax deductions. We know that we can help you.
Contact us today to get a consultation session and learn about our range of packages that suit your business needs.
Do you need help to run your business? Then you should probably hire a business consultant. But what does a business consultant do? How do they help your business?
Keep reading this article to find the answers to the above questions, so you can identify the importance of hiring a business consultant.
Who are business consultants
Before finding out what a business consultant does and how they could help your business, let’s find out who they are.
Business consultants are third-party individuals or businesses who will provide expert guidance and advice to run your business.
A professional business consultant would have years of experience working with various clients from different industries. It gives the necessary expertise to the consultant to deal with different challenges in the business world.
Business consultants would be proficient in different streams. The main areas that a consultant would specialize in are human resource management, marketing, operations, information technology, sales, accounting and taxation, etc.
What does a business consultant do?
Business consultants are generally experts in the industry with vast knowledge and experience. Therefore we cannot put a limit on the things that a business consultant can do.
Here are some ways a business consultant would help your business.
1. Identify the trend in the market
This is one of the significant reasons why inexperienced business owners fail. They fail to identify the emerging trends in the market.
To be a successful businessman, you should anticipate future trends and align your business strategies accordingly. However, this would be difficult if you didn’t have the necessary experience.
This is where a business consultant would come in handy. They can identify possible future trends and guide you to align your business operations accordingly.
2. Identify inefficiencies and shortcomings in the business
This is another important thing that a business consultant would do. They can identify the inefficiencies and shortcomings in business operations. These inefficiencies could make losses for the business.
A skilled business consultant would identify them and advise you on possible corrective actions.
3. Formulate internal controls and identify the loopholes in them
There are various types of internal controls that a business should adopt. These are the control mechanisms and procedures in the business, so that it doesn’t deviate from its main goals and objectives. For example access control, separation of duties, periodic accounting and tallying etc.
These internal controls are crucial for the success of a business. However, if there are any loopholes in these controls, it could damage the business.
This is where a business consultant would help. They can help to formulate appropriate internal controls and identify the loopholes in current control methods.
4. Formulate strategies to suit the current market
A successful business person should formulate suitable and correct strategies for the business to thrive. However, this could be challenging if you are new to the business world and don’t have the necessary experience.
A skilled business consultant could help formulate suitable strategies to take your business to the next level.
5. Advice on filing for taxes
As you know, overpaying taxes could lead to financial losses, while underpaying can lead to legal issues. Therefore it is crucial to assess your taxes accurately and pay them on time.
This is another activity that a business consultant would do. They can help to assess your taxable income and calculate the taxes accurately. They can advise you on how to take advantage of business tax deductions. These tips are crucial to minimize your tax obligations.
You cannot keep track of all the changes in taxation policies and regulations. However, a business consultant has to stay updated about these changes and inform the clients accordingly. Therefore, a consultant’s help would come in handy when filing taxes.
6. Educate the staff on sales tactics
Your staff should be highly skilled in making sales, especially if your business provides a service. If you feel your staff doesn’t have the required skills, then a consultant can help you.
A skillful business consultant can educate your staff and train them to adopt modern sales tactics. These tactics would help improve the business’s sales and increase its revenue.
Therefore, if your sales are stagnant, consider hiring a skilled business consultant.
Whom should you hire?
As said before, different consultants would specialize in different fields. Therefore if you are looking for a consultant for a specific need, you should contact a business consultant who is skilled in that area.
Not every consultant is suitable for everything. Further, you must check their credibility, years of experience, and what the previous clients had to say about them.
If you are looking for a skilled tax consultant in Narre Warren and Melbourne region, don’t hesitate to contact SPS Consultants. Our team specializes in tax accounting and has helped numerous clients to overcome taxation issues.
We can help you to achieve outstanding results and stay on top of your business. Feel free to contact us today to schedule a consultancy session.
Are you currently running a business or planning to start a business in the future? Then you probably understand how competitive the modern business world is.
You should probably seek help from an experienced individual if you don’t have the experience and expertise to run a business. Otherwise, you could be crushed by the intense competition.
If you don’t have the experience or the help, you should probably consider hiring a professional business advisor. This article will discuss who are professional business advisors and the top benefits of hiring them.
Who are professional business advisors
Before looking into the benefits of hiring a professional business advisor, you should know who they are and what they do. Business advisors will provide advice to formulate strategies, increase revenue, overcome challenges, and grow.
Most businesses in Australia fail in the first and second years of their startup. Therefore, it is essential to work with experienced advisors when running your business, especially if you don’t have the required experience.
There are various kinds of business advisors according to their specialization. They are legal advisors, tax advisors, marketing advisors, etc. Therefore you should hire a suitable advisor depending on your needs.
Benefits of hiring a professional business advisor
There are various benefits of hiring a professional advisor for your business. Some of these benefits are:
1. The expertise
Professional business advisors are experts in the field. They have a deeper and broader knowledge of various subjects since they work with various clients. Their knowledge, influence, and expert skills can help you to stay on top of your business.
2. Could be cost-effective
Poor decisions and planning can be costly. Even a simple mistake can cost you a lot of money and affect the customer’s trust in the business. Therefore you should make the best decisions when running a business.
Don’t think about the cost of hiring a professional business advisor. They can be costly, but the expertise and knowledge shared by an advisor will outweigh the cost.
Further, hiring a third-party advisor can also be cheaper than hiring a permanent employee for the job.
3. Highly updated
There can be various changes every now and then in the legal framework, regulations, market
trends, etc. As a business owner, it can be difficult to stay updated about every change in the
However, a professional business advisor would stay updated about these changes on your behalf.
They will keep you in-line with the current legal framework and inform you about the changing
4. Saves time
A skilled advisor has acquired knowledge and experience over the years. Therefore they know the
best practices, which could save time. They can easily identify the inefficiencies and shortcomings
in your business and inform you about the corrective actions.
Therefore you don’t have to spend hours of your valuable time detecting shortcomings and
inefficiencies in your business.
Business advisors are objective-oriented. They are not emotionally attached to the operations of the business. Therefore they will be truthful and get the job done quickly.
The advisors’ objectivity will help you get unbiased views and opinions of the business. These views are important to make the best decisions for your business.
6. Trains and guide the staff
This is another benefit of hiring a professional advisor. They will help train your staff and keep them in line with the business’s internal controls.
For example, if you want to train your staff on payroll, the advisors would implement a software system and train the staff to operate and maintain it.
7. Customized service
Professional business advisors are not bound to a single structure. Their values, advice, and strategies will be tailor-made to each client. Therefore, their strategies are suitable for individualistic challenges faced by the business.
As a result their advice and solutions are more effective than generic advisory services
Should you hire a business advisor
Most people think that business advisors are the people who borrow your watch to tell you the time. However, that is not the case. Business advisors come with years of experience, expertise, and knowledge.
You should hire a professional business advisor if you don’t have the necessary experience and expertise to run the business. However, you should choose them wisely.
You should do a background check on the advisor before hiring them. There are several factors you should consider when choosing an advisor. Some of these factors are how long they have served and the commendations given by the previous clients of the said advisor.
If you are looking for a professional business advisor, then we can help you. We are a team of advisors and consultants who can provide you with the best advice to run your business.
We have been in the industry for many years and have served many clients. We have helped them to stay on top of their business and achieve outstanding results. Therefore we can help you too. Feel free to contact SPS Consultants to schedule a consultancy session with us.
As a business, it is compulsory to pay business taxes in Australia. Therefore you should also know to get the advantage of the business tax deductions.
If you are doing your taxes through a professional tax agent, then you don’t have to worry about it. However, if you are doing the taxes yourself, you should know what a tax deduction is, how it would help you, what expenses could be deducted, etc.
This article will briefly explain what you should know about business tax deductions in Australia.
How business tax deductions work
When you run a business, you will incur various expenses. Out of these expenses, some are allowed to be deducted from the taxable income.
Your net taxable income will reduce when these expenses are deducted from the taxable income, thereby reducing your taxes.
However, you should keep in mind that only certain expenses are allowed to be deducted from the taxable income.
To simplify this, look at the simple formula used to calculate your taxable income.
Taxable Income = Assessable Income - Tax Deductions
What expenses can you claim as tax deductions?
As said before, you can only claim certain expenses as tax deductions. The ATO will allow you to claim most expenses incurred from running your business. However, these expenses should be directly linked to earning the assessable income of your business.
There are three conditions that ATO considers when allowing to consider a particular expense a valid deduction.
- The expense should be for the business and not for private benefit.
- If the expense is a mix of business and private benefits, you can only claim the portion of the business expense.
- You should have the records to prove it
That is being said, you can claim these expenses as tax deductions.
- Operating expenses such as salaries and wages of the employees, super contributions, purchase of office stationery, machine repairs, and maintenance expenses.
- Capital expenses such as the depreciation of an asset.
What expenses cannot be claimed as tax deductions
Do you remember the first condition of the ATO as mentioned above? Any expense you incur for personal benefit will immediately be disregarded as a business expense.
Following are some of the expenses which you cannot claim as tax deductions.
- Private and domestic expenses such as childcare fees and food for your family.
- Traffic fines.
- Entertainment expenses.
- The Goods and Services Tax (GST) of purchase, if you can claim it as a GST credit from your activity statement.
Read more: ATO
What records should you keep as proof to claim tax deductions
If you are claiming an expense as a tax deduction, you should have documents as proof of the expense. These records can be either be in written form or electronic media.
These records should prove that the expense is incurred for business purposes, and you should substantiate your claim.
For example, if you want to claim a motor vehicle expense, you should have the following
- Motor vehicle registration – Registration papers
- Details of the kilometers traveled for business and personal benefit – Oil and fuel receipts
- Loan or lease information – Loan or lease documents.
You should keep these records and documents for at least five years, from the date you lodge them in your tax returns.
Read more: ATO
Should you keep every receipt with you
As mentioned before, you must keep receipts to claim tax deductions. However, there are several exceptions.
If you don’t have a receipt, check whether the following conditions apply to you. ATO will allow you to claim an expenditure without a receipt under these circumstances.
Small expense receipt
These are petty expenses that are $10 or less. You can claim them as long as the total small expense claim is less than $200.
If you don’t have a receipt for these expenses, you can claim them by simply recording them.
Hard to get a receipt
Don’t worry if you cannot obtain a receipt for a work-related expenditure. You can still claim it by making a simple record. In the record, you should indicate what you purchased, to whom you paid how much was paid, and when it was paid.
Read more: ATO
Should you hire a tax agent to lodge the taxes
Filing for taxes can be tiring and stressful. However, calculating your taxes accurately is crucial to avoid legal issues and financial losses. Therefore you should be familiar with the tax laws and regulations of the country.
Hiring a tax agent to calculate and lodge your taxes is always ideal. They can understand your condition well and help you to get the maximum benefit from business tax deductions. If you are looking for a skilled tax agent, look no further.
Our team at SPS Business Consultants has the skills and experience to help you to get the maximum claims for tax deductions. Every business is important to us regardless of the scale. Therefore we can assist you regardless of your business’s scale and structure.