The Australian Taxation Office (ATO) is set to provide additional support for new small-business owners under its ‘ready for business’ campaign to ensure they understand and comply with their tax, super and registry obligations from the start.
As part of this campaign, Australian business number (ABN) holders will receive a series of emails from the ATO in the coming months, which include tips on ABN obligations, business structures, registering for goods and services tax (GST) and understanding employer responsibilities.
“Small businesses are vital participants in the tax and super system. As stewards for small businesses, our role in making it easy for small-business owners to get their tax and super right is more important than ever.,” ATO deputy commissioner Will Day stated. “Our goal is to provide small businesses with guidance, tools and tips so new business owners can focus on growing their business with confidence.”
The ATO conceived the campaign in light of the data that approximately 50 per cent of businesses fail in the first three years, often because they have at least been remiss in their ATO obligations from the start.
GST obligations
In particular, GST registration and payment is an ongoing area of concern for the ATO, which estimates that almost $8 billion in GST each year hasn’t been collected due to non-compliance, with small businesses contributing significantly to this gap.
And while not every small business needs to be registered for GST, but when their GST turnover is $75,000 or more or when they provide taxi, limousine or ride-sourcing services they must register and collect GST and then pay this to the ATO.
Day encouraged small businesses to set aside GST, as well as pay-as-you-go (PAYG) withholding and super if they have employer obligations. “Don’t be tempted to dip into GST, PAYG withholding or super to manage your cashflow – set up separate bank accounts for these funds so you’re always prepared when it’s time to pay,” he said.
Reporting side hustles
With over 700,000 taxpayers are supplementing their income with ‘side hustles’ including ‘gig’ or sharing economy activities, the ATO has reminded that if a hobby has turned into a profit-making business, it is the side hustler’s responsibility to fulfill the pertinent tax, super and registry obligations.
“Generally, a business involves continuous and repeated activities aimed at making a profit. Visit ato.gov.au/areyouinbusiness to learn more about whether your activities qualify as a business and understand your obligations,” Day said.
Early reporting encouraged
The ATO is also encouraging new small businesses to plan ahead to avoid a large tax bill when they lodge their first tax return by voluntarily entering and prepaying their estimated tax liability through PAYG instalments as soon as they start their business.
“We know that successful small business owners understand their tax, super and registry obligations and we are committed to helping them do so.” Day said. “Through transparent communication, including the support we have available for small businesses, small-business owners are better equipped to keep up with their obligations and stay on top of their tax payments. After all, small business is serious business.”
