Are you running a business in Melbourne? If so, did you know that you must submit a business tax return annually?
This article will give you a quick guide on business tax returns and why you should submit it yearly on time.]
What is a business tax return?
A business tax return is a document filed with the taxation authority (Australian Taxation Office or ATO) to calculate the business’s tax liability. The tax return will include income and expenditure of the business and other tax-related information.
Just like calculating the tax liability, the tax returns will help to schedule your payments and request refunds for overpaying the taxes.
Who should submit a business tax return
If you are carrying out a business, you should lodge a business tax return every year, even if the business hasn’t earned any income. There is no specified threshold for business income to submit the tax return. As a result, even if you earn a single dollar, you should submit a tax return.
Therefore every business, regardless of the structure, should submit the tax return on or before the due date.
However, how you should report the tax return and when you should submit it depends on the nature of your business entity.
What is the tax return requirement for my business
As said before, your business tax return requirements depend on the type of your business structure. Let’s look at the various tax return requirements that you should fulfill depending on your business structure.
If you are running a sole trader business, you have to submit the business tax return as an individual tax return. You should include all the business incomes and expenditures in a separate section of your personal or individual tax return.
You don’t have to submit a separate document for your business.
Your partnership business should have its own Tax File Number (TFN) but shouldn’t pay income tax on its profits. However, your partnership should submit its tax return under its own TFN.
Every partner should declare their profit share received from the partnership in their own individual tax return.
As you know, a company is considered a separate legal entity in the face of the law. Therefore, you should submit a company tax return and pay the income taxes on the profits earned by the company.
On the other hand, if you are a Director, you still have to declare your personal tax return separately.
A trust also has its own TFN and should submit a separate trust income tax return.
How can you lodge your tax return?
Every business is different from each other. Their structure is different, their capacities are different, etc. Therefore you should decide whether to lodge the tax return by yourself or to hire a professional depending on the complexity of your business and its applicable taxes.
As a matter of fact you have the following options to lodge your business tax return:
- Through a registered tax agent
- Online with myTax if you are a sole trader.
- Through a Standard Business Reporting (SBR) software, if you are running a partnership,a company, or a trust.
- By paper.
When should you lodge the business tax return
Submitting the tax return before the specified deadline is mandatory to avoid penalties and legal consequences. Therefore you should know when to submit the yearly tax returns.
If you are submitting the tax returns by yourself without going through a registered tax agent, the due date is on the 31st of October. This date is applicable for sole traders, partnerships, and trusts.
If your business is a company and you are submitting the tax returns by yourself, the due date is by the 28th of February. However, if there is any previous year’s outstanding balance, then the due date will be the 31st of October.
If you submit the tax returns through a registered tax agent for any business structure, the due dates are bit more flexible.
What if you couldn’t submit the tax return on time
ATO recognizes that sometimes businesses fail to meet their obligations on time, even in the best interest. Generally, ATO will not generally impose penalties in isolated cases of late lodgments.
If you fail to lodge the tax return on time, the ATO will contact you by phone or writing to remind you of your obligations. However, if you still fail to meet the obligations, ATO will send a Failure to Lodge (FTL) document imposing a penalty.
This situation generally arises when you are lodging the tax returns by yourself. However, if you are submitting through a tax agent, then you can get special protection under ATO’s Safe Harbour Provisions.
If you are using a tax agent, the rules are a bit loose, and you will not get an FTL if you have fulfilled specific criteria.
Therefore it is always better to lodge your tax returns through a tax agent.
Read more: ATO
Why should you hire SPS Consultants?
We are a team of professional consultants, tax accountants, and agents in Melbourne. We have served hundreds of clients over many years.
Our team can help you to prepare your tax returns and ensure that you will not face legal issues for underpaying the taxes or financial losses from overpaying. We will also ensure that you will never miss a deadline.
Don’t stress out doing something which you can simply outsource. We are experts in the industry and can help you manage your taxes.
Don’t hesitate to contact us today to make an appointment and get to know our tailor-madepackages for your business.