Month: April 2023

Setting up a company in Australia can feel like an overwhelming process, but the entire process will be an absolute breeze. Thanks to the services offered by the team at Kirpatax.

When you trust us with your company registration, you are choosing to work with professionals who will closely monitor each step of the process and ensure that you have no issues later down the line. At Kirpatax, taking care of your company registration is just one simple step.

ELIGIBILITY CRITERIA FOR INCORPORATING A COMPANY IN AUSTRALIA

• Mandatory for registering an Australian Company through ASIC (The Australian Securities and Investments Commission)
• Must have minimum number of directors and shareholders.
• At least one of the directors must reside in Australia (If the business is proprietary)
• Two out of three directors should be Australian citizens (If it is a public company)
• The owners must get written authorization before operating the business in Australia.
• The Australian company’s directors, owners and top management executives must all be older than 18 years of age.

Kirpatax team of experts can provide you complete in depth details regarding incorporation of business. Our expert team will complete all your documentation process and incorporate your company in Australia without any hassle.

When you take on a second job, your primary aim is likely to pay off debt or reach some other financial milestone. However, additional income from a second job or side gig can put you in a higher tax bracket, reduce your eligibility for tax credits, and may result in a large tax bill next tax season.

You may receive your income from 2 or more payers at the same time if you:

• have a second job or more than 2 jobs
• have a regular part time job and also receive a taxable pension or government allowance
• are working under an ABN as a contractor, sole trader or other business structure.

Here are some points as to how two jobs can affect your taxes:

• Adding a second income to your original income can sometimes push you up into a higher tax bracket, so you’ll be paying a greater percentage in taxes on the income from a second job.  
• It’s key to get your withholding just right if you’re working for salary or wages so you’re not hit with a surprise tax bill at the time of taxes.
• Qualifying for some tax breaks depends on your adjusted gross income, so you could find that a second job makes you ineligible.

Where you have more than one payer, you should advise your other payers to withhold tax from your income at a higher rate. This is the ‘no tax-free threshold’ rate. Doing this reduces the chance of you having a tax debt at the end of the income year.

If your income is $18,200 or less

If you’re certain your total income for the income year from all your payers will be $18,200 or less, you can choose to claim the tax-free threshold from each payer. If you do this and your total income later increases to above $18,200, you’ll need to provide one of your employers with a withholding declaration. The withholding declaration will advise them you want to stop claiming the tax-free threshold from that payer.

A Tax File Number (TFN) is a unique identifier issued by the Australian Taxation Office (ATO) to each taxpaying entity — an individual, company, superannuation fund, partnership, or trust.

Both domestic and international students are able to apply for a TFN via the ATO website.  

It is not compulsory for international students have a TFN, however we encourage international students to get one for the following reasons:

• Most banks will require you to have one before you open a bank account
• If you do not have a TFN you will have more tax withheld (46.5%) from your wages or pay more tax on bank interest than necessary.  

Eligibility to apply online:

To apply for a TFN online using myGovID, you need to:

• be 15 years old or older
• have an Australian passport – it can be up to 3 years expired
• have at least one other Australian identity document – for example, a driver’s licence.

You will also need to set up a Strong myGovID.

Apply online with myGovID:

To apply for your TFN online using myGovID, you will need to:

• set up your Strong myGovID
• review the Terms and conditions
• apply for your TFN

If you’re confused by the concept of GST, you’re not alone. Many freelancers and sole traders in Australia aren’t sure if they need to register for GST, or how to calculate it. Let’s break down exactly what GST is and who needs to register for GST.

GST stands for goods and services tax. It is a tax on goods and services sold in Australia, first introduced in July of 2000. In the vast majority of cases, GST is a 10% tax. 

If you are a sole trader or freelancer doing business in Australia, there is a chance you need to register for GST. It depends on two factors:

• Meeting the $75,000 threshold
  If any point your Gross Income from your business is $ 75,000 or more in a single tax year, you need to register for GST. Gross Income simply means the money you make before taxes and deductions.
• GST for ride share and taxi drivers
  Drivers for companies like Uber, Ola as well as taxicab and limousine drivers must also register for GST even if they are below the $75,000 threshold.
  
  You can choose to register for GST even if you earn less than $75,000 per year or don’t provide ride share services. There are a few reasons:
• BUSINESS PERCEPTION– If you don’t charge GST, you are telling people that your annual turnover is less than $75,000. It might not portray the right image.
• CLAIM GST CREDITS- You can claim GST credits for the goods and services you have purchased for your business.

In order to save tax in Australia, you need to follow these strategies:

• Choose the right Business Structure (Sole Trader/ Partnership/ Company/ Trust)
• Claim all the Tax Deductions such as Travel Expenses, purchase of essential equipment or depreciation of expenses)
• Claim a tax offset (If you’re a sole trader, partner or trust beneficiary of a small business with an annual turnover of less than $5 million, you may be able to claim a $1,000 tax offset to lower your tax liability.)
• Claim a deduction for the unrecoverable income (Bad Debts)
• Claim Depreciation deductions for machinery and work vehicles in case of some business assets.
• Offset income with negative gearing – As an individual, if you own a rental property with costs that exceed your profits, you can deduct your losses from your taxable income. And if you know that you’ll take a loss on your rental property in the financial year, you may be able to apply for a PAYG withholding variation, which decreases your withholding throughout the year. 
• Make charitable donations in order to claim those expenses as deductions.
• Purchase private health insurance – If you earn more than $90,000 per year and don’t have health insurance, the ATO will levy a Medicare surcharge of 1-1.5%, depending on your total income.
• Use Accounting Software – As a business owner, keeping track of all your expenses and every possible tax deduction can be difficult, but when you use accounting software all your key financial information is stored in one place. You can also use your software to manage tax and basic reports, track GST and lodge BAS. 
• Pay all the employees, Superannuation by the deadline – If you have employees, you can claim a deduction for Superannuation Guarantee contributions.
• Consider longer-term investment strategies that include borrowing money to buy residential property, business and shares.