What Is The Tax Payment System For Sole Trader In Australia
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What is the Tax Payment System for Sole Trader In Australia

Article for those who are thinking about relocation to Australia.

More and more people, especially in the field of information technology and construction register ABN (Australian Business Number) and receive wages by invoicing to the employer.

In the first year of transition from the salary at ABNб it turns out that taxes are not paid during the year. It is very nice.

However, this perfect life comes to an end after filling the declaration of income.

Tax return shows the presence of a business and personal service income and reports to the tax office that the business is profitable.

So we advise you to file a tax return as late as possible, usually at the end of October. The deadline for declarations is October 31th, if there are no mitigating circumstances.

Once the tax office has received information about income - two things happen:

The bill for the past year

You receive an invoice for payment of the tax for the past year. They are trying to soft the shock of a large amount of tax as they can.

As a rule, the period of payment of the tax is postponed for several months. If we submit a declaration to the end of October, the period of payment of the invoice is usually somewhere in April or even June next year.

There is plenty of time to gather thoughts and dig money to pay.

And even if we didn`t get enough, it is possible to arrange payment of bills in installments. We always advise to use option of the interest-free loan. To do this, you need to call your tax service and approve the payment plan once a month or more frequently during the next year. It is desirable to call a few days before the due date specified in the bill.

Note that whatever your goals are: business (Work Visa) or family migration (Family Visa), when you are relocating to Australia you may need help of visa agency, so pay to this question enough attention and the choose the best you can.

Advance tax by next year

After learning that your business makes a profit, tax office wants you to pay taxes in advance, at the expense of next year.

Pay as you go installment - this is a common system of prepaid taxes for people who have income from a business or rental and have paid more than $ 1,000 underpaid taxes last year after sending the declaration of income;

All workers in Australia gets salary with already paid tax and their employer sends taxes every three months to the tax service. Similarly, the tax service wants to receive taxes from contractors and business throughout the year.

If the report is filed in late October, then in December comes another letter from the tax, stating the total amount of prepaid tax for the next year. This amount is similar to the total amount of tax specified in the tax return, plus a percentage for inflation.

Then you receive another letter with actual PAYG Installment form. There are all the details for payment and the term of payment amount. The amount of payment is the fourth part of the total pre-payment of the tax, which is logical, since the payment is quarterly.

Correct address

If such letter has not come, it does not mean that the tax service pardoned you. Likely, they have written to your old address.

The address that was specified at registration of ABN, even after receiving the tax return with the new address is not updating automatically.

While registering your ABN you register for Auskey. This is an electronic key that gives access to your data on the website of the tax service (ATO business portal). It's never too late to get and it's a handy thing to update an address or to submit your own Business Activity Statement (BAS) online.

The second year of the payment of taxes.

During the year the taxes are paid and at the time of filling the tax return you are inciting the results. If you paid more than you need, the tax returns. If you paid less, it is needed to pay the full amount.

As a rule, the reason of surcharge is only the fact that during the year not all quarterly payment of tax was paid.

Therefore, any deferred payment is not given and you have to pay as soon as possible.

Can I change the payment amount?

If circumstances change, you should definitely reduce or even cancel the prepayment of taxes. The most common reason for this change is return to the salary or closing of the business.

You can cancel prepay through a business portal or with the help of an accountant.

Another thing: to rely on deferred payment it is important to submit the declaration on time - until October 31th.

Here some basic principles about tax payment in Australia. Hope this information was useful and remember that, if you respect authorities – authorities respect you.

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