Tax Facts - Activity Statement
Businesses use activity statements to report and pay a number of tax obligations, including GST, pay as you go (PAYG) instalments, PAYG withholding and fringe benefits tax. Non-business individuals who need to pay quarterly PAYG instalments also use activity statements.
Activity statements are personalised to each business or individual to support reporting against identified obligations.
Activity statements for businesses may be due either quarterly or monthly. Generally, businesses can lodge and pay quarterly if annual turnover is less than $20 million, and total annual PAYG withholding is $25,000 or less. Businesses that exceed one or both of those thresholds will have at least some monthly obligations. Non-business individuals are generally required to lodge and pay quarterly.
Businesses or individuals with small obligations may be able to lodge and pay annually. Some taxpayers may receive an instalment notice for GST and/or PAYG instalments, instead of an activity statement.
The Australian Taxation Office (ATO) web site provides instructions on lodging and paying activity statements. Detailed instructions are provided for each of the different tax obligations:
Tax Facts - General Value Shifting
The General Value Shifting Regime (GVSR) applies to arrangements that shift value between assets, causing discrepancies between the market values and tax values of the assets. Most value shifts happen when parties don't deal at the market value, causing one asset to decrease while the other increases.
Three scenarios are targeted under the GVSR. Exclusions apply to small values in each of the scenarios, as follows:
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Indirect value shifting (exclusion applies if total value shifts under a scheme are less than $150,000)
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Direct value shifts on interests (exclusion applies if total value shifted is equal to or less than $50,000)
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Direct value shifts by creating rights (exclusion applies if the market value of the right granted exceeds the proceeds for the grant by $50,000 or less).
Generally, the GVSR does not apply to normal commercial dealings conducted at market value, or dealings within consolidated groups. There are several other exclusions and safe harbours in the rules.
Tax Facts - Income Tax
Income tax is levied on taxable income, which is calculated as assessable income less allowable deductions. Gross tax on taxable income is reduced by tax offsets, to arrive at net tax payable or refundable.
Individuals
The Australian Taxation Office (ATO) publishes lists of assessable income, allowable deductions and tax offsets for individuals. Sole traders declare business income in their individual income tax return, they are not required to complete a separate return for their business. Tax on individuals is charged at marginal rates. You can use the tax tables to determine how much you are taxed.
Resident tax rates 2018-19
The above rates do not include the Medicare levy of 2%.
The above rates include changes announced in the 2018-19 Federal Budget.
Non-resident tax rates 2018-19
The above rates include changes announced in the 2018-19 Federal Budget.
MORE: See the ATO web site for more information on Individual Income Tax Rates.
Companies
A company is a distinct legal entity with its own income tax liability, and is required to lodge a Company income tax return. The company tax rate is generally 30%. Special rates apply to certain types of companies, or companies in certain industries.
Partnerships
A partnership carrying on a business must complete a Partnership tax return to show all income earned and deductions claimed for the income year, and how the net income or loss was shared between the partners. The partnership itself is not a taxable entity. Rather, each partner includes a share of the partnership's net income or loss in the partner's taxable income.
Partnerships where the only income is from joint investments (for example, jointly owned shares or rental properties) are not required to lodge a Partnership income tax return. Rather, each partner's share of the joint income is declared in the partner's own tax return.
Trusts
Where a beneficiary (not under a legal disability) is presently entitled to a share of net income of a trust, the trustee is not taxable. Rather, each such beneficiary includes a share of the trust's net income in the beneficiary's taxable income. A trust cannot distribute a net loss to the beneficiaries, the loss is carried forward to offset against net income in later years.
Where a presently entitled beneficiary is under a legal disability (for example, under 18 years of age, a non-resident, or incapable of managing his/her own affairs), the trustee is taxable on the beneficiary's share of the trust's net income. The tax rates correspond to the tax rates that would otherwise be payable by the beneficiary.
Where no beneficiary is presently entitled to part of the trust's net income, the trustee is taxable. The tax rates depend on the trust's particular circumstances, for example income of deceased estates attracts a different tax rate depending on the stage of administration of the estate.
Superannuation funds
A superannuation fund is a distinct legal entity with its own income tax liability and is required to lodge an income tax return. Different income tax return forms are used by self-managed superannuation funds and other superannuation funds. The superannuation fund tax rate is generally 15%. Higher rates apply to net non-arm's length income, and contributions by or on behalf of a member who has not quoted his/her tax file number to the trustee.
