Income Tax is the amount of money that is paid to the government from the individual income or group income. It is usually payable throughout the year as the taxpayers earn. For example, if there is any individual working with an employer, the employer would deduct the tax as per the salary slab and would send the same to the Australian Taxation Office.
The amounts are report and lodge purely depend on the business entity and type. There are the following types of business entity:
Let us have a look at the following turn-by-turn:
In case the business is a sole trader, the taxpayers must lodge a tax return even if the income is not in the tax slab. This is inclusive of:
For your return, the taxpayers must report:
In case of the business being operated as a partnership, it should be lodged as partnership tax return and reporting the net income including the assessable income minus allowable expenses and deductions. In case of an individual partner, the taxpayers must report on their tax return:
The partnership scheme does not allow taxpayers to pay on individual income. Based on net partnership income, Income tax should pay the partners’ pay tax on his/her share.
In case trust operates the business, then the trustees must:
The trust must report their net income or loss under the trust’s assessable income minus deductions. If the taxpayers are including the trust beneficiaries, they must report on their tax returns:
In case the business is being operated as a company, the company tax return must be lodged. The company must report every taxable income, tax offsets and credits, and PAYG installments along with the tax amount it is liable to pay on the refundable income. This separates the company’s income from your income.
The final company tax return must be lodged before deregistering via the Australian Securities and Investments Commission (ASIC). The moment the company gets deregistered, the members can no longer lodge a company tax return. In case the company wants to lodge tax returns, they have to reinstate the deregistered company with ASIC.