Taxation:
Taxation legislation is administered by the federal and state and territory governments. Before you can begin operating your new small business you'll need to know what you must do to comply with government taxation regulations.
Goods & Services Tax (GST):
Goods and services tax (GST) is a broad-based tax of 10 per cent on the sale of most goods and services and other things in Australia. You must register for GST if your annual turnover is at or above $50,000 (or$100,000 for a non profit organisation).
How to Work it Out:
Your GST Payable will be 10% of your total annual revenue (what you earn from sales of your product)
Payroll tax:
A tax on wages and salaries paid by employers. You must pay payroll tax if the wages you pay your employees exceed $45,833 a month or $550,000 over the full financial year. If a business does not fall into this category, it is exempt from payroll tax.
Note: Payroll tax will probably not apply to most DTL businesses, as they will be much smaller businesses. If so, simply leave the pay roll tax out of your costing sheet.
How to Work it Out:
If your business does pay more than $45,833 a month in wages, or $550,000 over the full financial year, you need to calculate payroll tax at 5.25% of the wages paid.
E.g. If your wages for one month are $50, 000 you will pay $2625 in payroll tax.
(5.25% of $50,000 = $2625) Source: State Revenue Office Victoria
These may include;
Income Tax:
Income tax is levied on a person's or businesses taxable income and is required to be paid to the federal government.
Fringe Benefits Tax:
Fringe benefits tax (FBT) is a tax paid on certain benefits employers provide to their employees in place of salary or wages.
Capital Gains Tax:
Capital gains tax is the tax you pay on any net capital gain you make.
Pay as You Go (PAYG) Tax:
If you have employees you are required to withhold tax from payments you make to them. Pay as you go (PAYG) is a system for paying installments towards the expected tax liability on a company's business and investment income for the current income year.
How to work out the cost:
As this information is complicated and would require training and possible external (e.g. accounting) assistance, for the purpose of writing the financials for your DTL Business Plan, work out the amount of tax your business has to pay by calculating 30%, on average, of your revenue earnings for one year, or 2.5% per month.
Note: This will be recorded in the ‘Other Taxes’ section of your Cash Flow Statement.
If you would like to do some more research into taxation in business, visit the
Taxes Explained page of the www.business.gov.au website