Frequently Asked Questions
WHAT ARE FUEL TAX CREDITS?
Most fuel used in your business is eligible for fuel tax credits. This includes fuel used in equipment, tools, machinery and heavy vehicles (vehicles greater than 4.5 tonne) that travel on a public road. The rate at which you can claim varies according to the activity the fuel is used in. You must be registered for GST as well as fuel tax credits to claim using your business activity statement. Forward Focus are experts in Fuel Tax Credits including preparing back claims.
WHAT IS AN ABN?
The Australian Business Number (ABN) provides a single indentifier when dealing with the ATO and other government departments. To qualify for an ABN, you must be a company registered under Corporations Law in Australia or a business entity carrying on an enterprise in Australia. You need an ABN if your GST turnover is $75,000 or more.
WHAT IS CAPITAL GAINS TAX?
Capital gains tax (CGT) is the tax you pay on a capital gain. It is not a separate tax, but part of your income tax. The most usual way to make a capital gain or loss is to sell assets like real estate, shares or managed fund investments. If you are an individual, some assets may be exempt from CGT, including your main residence, car, motorcycle and assets for personal use that you acquire for $10,000 or less. There are other exemptions, rollovers and concessions that may allow you to ignore, defer or reduce your capital gain or capital loss. If you are an Australian resident, CGT applies to your assets anywhere in the world. For foreign residents, CGT applies to taxable Australian property.
WHAT IS FRINGE BENEFITS TAX?
Fringe Benefits Tax (FBT) is paid on particular benefits employers provide to their employees or employee associates instead of salary or wages. Benefits can be provided by an employer, an associate of the employer or a third party by arrangement with the employer. An employee can be a former, current or future employee. FBT is separate from income tax and based on the taxable value of the various fringe benefits provided. The FBT year runs from 1 April – 31 March.
WHAT ARE THE SMALL BUSINESS ENTITY CONCESSIONS?
Small businesses with an annual turnover of less than $2 million may qualify for a range of tax concessions. If your business is eligible you can use the concessions that suit you. You may have to satisfy additional conditions and will need to check whether you qualify for the concessions each tax year.
Eligible businesses can use the following concessions listed below:
- CGT 15-year asset exemption
- CGT 50% active asset exemption
- CGT retirement exemption
- CGT rollover
- Simpler depreciation rules
- Simpler trading stock rules
- Immediate deduction for certain prepaid expenses
- Immediate deduction of up to $5,000 for motor vehicles
- Instant asset write-off threshold of $6,500
- Accounting for GST on cash basis
- Annual apportionment of GST input tax credits
- Paying GST by instalments
- FBT car parking exemption
WHAT ARE TAXPAYER PENALTIES?
Taxpayers who do not meet their tax obligations may face penalty or interest charges. To avoid these charges, ensure you pay the full amount of tax you owe by the due date.
The main charges for failing to meet tax obligations are:
- General Interest Charge (GIC) – Applies to a variety of situations, whenever outstanding amounts are due to the ATO.
- Failure to lodge on time penalty (FTL) – Administrative penalty which may be applied if you fail to lodge a return, statement, notice or another document with the ATO by the required date.
If a taxpayer is audited and an amended assessment is raised, further penalties of up to 75% of the additional tax levied may be applied.