There are several things to aware of when it comes to your tax obligations. Being mindful of the deadlines that are imposed upon you by the Australian Tax Office (ATO) is a simple but effective way of reducing your risk of falling foul of the tax man.
Not lodging tax returns or failing to pay tax, GST or superannuation on specific dates will cause you plenty of unnecessary conflict with the ATO. There will be only one winner and that’s not you, so be aware of due dates and honour them.
Further problems can arise if you’re a business that takes in large amounts of cash. Spending money on a holiday or clothes can be tracked by the ATO, which is highly sophisticated in determining exactly what your business expenditure should be. Tax evasion won’t be looked upon favourably and the ATO uses debt collection agencies to enforce its rules.
You should also be wary about tax paid on loans. Interest charged on business or investment loans is tax deductible, but private loans aren’t, so be smart about the loan you take out.
If you’re thinking of exiting your business, capital gains tax becomes an issue. Bear in mind that there are specific capital gains trust concessions for small businesses, such as a 15-year business ownership exemption, where the owner is over 55 and the sale is connected to retirement.