Are You Ready For Your Business’ Tax Return? Here’s What You Need To Consider
If you are a business owner, you most likely already know that most of the income you receive during the course of the financial year is seen as assessable income, meaning that it has to be declared to the Australian Taxation Office (ATO), and is subject to taxation. However, there are various considerations regarding your business’ tax return that you need to be aware of, which we’ve listed below.
As we mentioned above, the bulk of the income you receive from your business activities is assessable, and that also includes foreign income. There are, however, exceptions to assessable income, like income you earn from a hobby, or prizes that you’ve won that are not related to your business.
It is also important to note that the accounting method you use can affect which amounts you need to include for a particular financial year.
According to the ATO, you may claim a deduction from your assessable income for most of the expenses your business incurs, as long as these expenses are directly related to helping your business earn its assessable income.
Concessions, offsets and rebates
These financial considerations reduce the amount of tax you owe on your taxable income. Keep in mind that the availability and eligibility of available tax concessions, offsets and rebates change annually, so ensure that you have clarity on which concessions you are allowed if any.
Regardless of how you calculate your taxable income, you will need to make an income reconciliation adjustment which will reconcile your business’ operating profit or loss, with your business’ taxable income.
If you are unsure about this reconciliation process, we recommend that you speak to an accountant.
If your business is operating at a loss, that loss can normally be carried forward into the next financial year, during which you can claim a tax deduction for that year.
In the case of sole traders and partnerships, there is the possibility of you claiming the loss against your taxable income.
This is by no means an exhaustive list of the tax rules and regulations you need to be aware of when filing your business’ tax returns Melbourne. If you feel that you need expert advice on how to complete your business’ tax return, please don’t hesitate to contact us as soon as possible.
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