Blog

Money Doesn’t Come Without Guidance ...

Awesome Image
22
May
  • Posted By : Administrative
  • Category: Income
  • Comments: 0

WHAT GENERAL THINGS TO CONSIDER WHEN YOU ARE REPORTING YOUR SOLE TRADING OR PARTNERSHIP BUSINESS IN THE TAX RETURN?

While reporting for Sole Trading Business in the tax return
The net income an individual receives from carrying on a business needs to be declared in the tax return. As per fact, sole trader declares that income as a part of their personal income and it gets taxed at the same rate as an individual.
As a sole trader, the individual needs to report the assessable business income less the business deductions they claim. There are some exceptions regarding which deductions you can claim for running your business. Deductions like depreciation of the business assets (costs less than $100), bad debts, superannuation contribution for employees of the business and expenses incurred in the production of business income are allowed.
Furthermore, any other assessable income, for example salary and wages in PAYG summary, dividends and rental income, less any allowable deductions against the receivable income. Sole traders can claim for tax deductions on the costs that were incurred in running the business but if the expenses were related to entertainments, fines or some other private use, they cannot be claimed for tax deduction.

 

While reporting for Partnership Business in the tax return
In partnership business, a business does not pay tax on the assessable income, each partner pays taxes on their share of the net income. Thus, distribution of the income or loss between each partner needs to be well-defined and mentioned.
For Capital Gains Tax (CGT) purposes, each partner owns a proportion of each CGT asset and calculates a capital gain or capital loss on their share of each asset. It is the individual partners who make a capital gain or capital loss from a CGT event, not the partnership itself.
As a partner, one must report their share of partnership in net income or loss of the business. For example, if partnership is equally distributed among two partners (50% of the share), each partner is accountable individually for paying tax on their respective share of the net income.

Additionally, other assessable income like salary and wages, dividends and rental income needs to be reported by the partners while reporting their tax return.


Comments 0

    Currently, there are no comment.

Login to comment

Latest Posts

Popular Post

We provide the fastest, easiest and most effective online tax return solution