FAQ Business Tax

What is the company rate for FY2022 for base rate entity

The company tax rate for base rate entity has been reduced to 25% for the FY2022, which is from 1 July 2021 to 30 June 2022. Prior to that, in Fy2021, the company tax rate is 26%. 

Is interest paid on an investment loan tax deductable?

Yes, interest paid on an investment loan is fully deductible, as is pre-paid interest too.

Can an individual carry forward a loss?

Yes, Individuals can carry forward a tax loss indefinitely, including the capital loss. However, the loss must be claimed at the first opportunity.

Can a company carry forward losses?

Yes, a company can carry forward tax losses indefinitely. Also, a company can use it when it wishes provided it has the same ownership and control. Hence if you want to change the shareholding of your company, please give EndureGo Tax a call, as the leading CPA accountant in Inner West Sydney, Northern Beaches and Adelaide, we would be able to give you a sound advice. 

What tax rate does a company pay?

From the 2017–18 to 2019–20 income years, companies that are base rate entities must apply the lower 27.5% company tax rate. The rate reduced to 26% in the 2020–21 income year and then to 25% for the 2021–22 income year and future years.

A base rate entity for an income year is a company if:

  • the company’s aggregated turnover for that income year is less than the aggregated turnover threshold for that income year, and
  • it has 80% or less of their assessable income in that income year that is base rate entity passive income – this replaces the requirement to be carrying on a business from the 2017–18 income year onwards.
Does trust need to pay income tax?

A trust does not have to pay income tax on income distributed to beneficiaries but it does have to pay tax on undistributed income. Hence it is very important to ensure you had distribute correctly to the beneficiaries. It is also important to review your trust deed at least on a three years basis.

Is a partnership a taxable entity?

No, but it must lodge a tax return annually. Income made by the partnership is distributed according to each partner’s agreed fixed portion. It is also essential to remember partnership has an unlimited joint liability, meaning that one partner would carry the liability for the other partner.

What tax implications does a partnership have?

In a general each partner has unlimited liability. Debts incurred by a partnership incurs are the legal responsibility of all partners.

What liabilities does sole trader have?

A sole trader is responsible for all the liabilities of the business.

What is the difference between company, and sole trader?

Companies and sole traders have different legal, tax and reporting obligations. However,
a key difference between a company and a sole trader is that as a sole trader you and your business are a single entity. That means you (and your sole tradership) share the same tax file number (TFN) and Australian Business Number (ABN). A company, by contrast, has its own TFN and ABN.

In addition, a sole trader is subject to progressive tax rates which, depending on income, can be as high as 47.5%. Company tax rates range from 27.5% – 30%.

Companies also have many more regulatory compliance requirements. For example, company funds must be kept separate from personal funds (since you and your company are two different entities). The use of company funds as personal funds is tantamount to drawing an income, which has different tax implications.

What are the tax implications of an inheritance?

An inheritance is not taxable unless you are advised otherwise by the executor. However, if you invest the income from an inheritance then earnings from that investment will be taxable.

Will I pay tax if I sell my family home?

In most cases, the answer is no. This is because the Australian tax law provides an automatic exemption for any capital gains tax when you sell your main residence. However, that exemption does not apply to non-tax residents. So, for example, suppose you had lived in Australia in the main residence and moved overseas to work and want to dispose of your main residence. In that case, you need to contact us. As the leading CPA accountant in Inner West Sydney, Northern Beaches and Adelaide, we would be able to provide sound advice to structure it hence to minimize your tax.  

What tax do I need to pay when selling a property (that is not my main residence)?

Property is a capital asset, so at the time of disposal, it will attract capital gains tax (CGT). CGT, in the case of a property sale, is a tax paid on all income derived from the sale – the income is understood as the amount remaining once the property’s purchase price and its various selling costs (e.g. real estate agent fees, stamp duty, marketing costs) have been deducted from the sale price.

Our job is to lower your capital gains tax by maximising all possible incidental costs; and by applying the correct accounting treatment to capital gains tax, such as the small business active asset reduction (which provides a 50% reduction of CGT on the sale of an active business asset that the seller has owned for over 12 months).

How much tax can I get refunded from my tax return?

The amount of tax you get refunded is determined by how much tax has been withheld from your gross wages or assessable income. If the amount withheld is greater than the amount Australian tax law requires of your taxable income you will be refunded the difference.

As tax agents, we have several ways of reducing the amount of tax that’s legally required of you.

At EndureGo Tax our mission is to ensure we maximise all legally entitled deductions, whether that be for work and/or for your investments and therefore maximise your tax refund.

Can travel expenses to an investment property be a deduction?

As it stands, you cannot claim travel expenses for residential investment dwellings. Travel expenses to commercial dwellings, by contrast, can be claimed. It is essential, however, to log all expenses in a formal travel diary.

If your property is half residential and half commercial, you can you prorate the claim.

Can you claim depreciation in investment property tax return?

Yes, you can. Investment property depreciation is comprised of:

  1. building depreciation a
  2. plant and equipment depreciation

Commonly, these are also known as non-fixture and fixture deprecation respectively.

Currently, for newly built investment property, you can claim deprecation for both the fixture and non-fixture items. With second-hand dwellings, however, you can only claim depreciation on the non-fixture items.

Typically depreciation is done by a licensed Quantitative Surveyor, whose fee is also tax deductible.

What is tax file number, how should you keep it?

Your Tax File Number (TFN) is your personal reference number in the tax and superannuation systems and uniquely identifies you, so it is important to keep it secure.

It’s important to remember that as a sole trader your business tax file number is your individual TFN (since you are, from a taxation point of view, the same entity). However, business structures like companies, trusts, partnerships, and with self-managed super funds the tax file number will be different from the individual tax file number (as these structures view the individual as separate from the business entity).

As a leading professional CPA accounting firm with offices in Ashfield, Sydney, and North Beach, Adelaide, we’re ready to get your finances and tax affairs optimised. Call EndureGo today for an initial free 15 minute telephone consultation with John and his team on 1800 841 312.

What if you lose your tax file number

If you lose your tax file number, you need to contact your tax agent immediately and see whether there were any suspicious activities on the tax account. Your tax agent then will write a secured message to the ATO informing the loss and ask them to be vigilant on the account. As the leading CPA accountant in Inner West Sydney, Northern Beaches, and Adelaide, we would be able to help you if you have lost your tax file number. Give us a call, or contact us online.

Is interest expense in the investment loan deductible to my tax?
If you have an investment property loan, sometime it is important to ensure you have an optimal loan structure to maximise the tax benefit. The interest expense you paid on the investment loan are fully deductible, and sometime it is important to consider whether pre-paid interest expense are deductible as well.
What is Superannuation Guarantee Charge Statement

If your business hires employees in Australia, you need to pay them a superannuation guarantee (SG). From 1 July 2022, the SG would be 10.5% of the wage. YOu have a deadline to pay those SG to your employee’s superannuation account by the 28th of the following month of the quarter-end (i.e. you need to provide them with a super choice form at the start of the employment). Suppose you fail to do so by that date. In that case, you need to lodge a Superannuation Guarantee Charge Statement, outlining the amount you are late in paying or not paid at the moment, along with the same amount as the penalty of Superannuation Guarantee Charge. As a leading professional CPA accountant in Inner West Sydney Ashfield, Belrose Northern Beaches and Adelaide, we would be in a position to assist you with reducing that penalty.