Normally, if you make a tax loss in an income year you can carry it forward and deduct it in future years against income for tax purposes. You can generally carry forward a capital loss and offset it against a capital gain in later years. Also, you can claim a deduction for bad debts that you have actually written-off if they were previously included in a business’s assessable income.
Non-residents for tax purpose are required to pay income tax on Australia sourced income whether or not they are actually present in Australia. Interest income, unfranked dividends and royalties are not subject to income tax.
The dividend imputation system eliminates double taxation when dividends are distributed to shareholders. The company pays a corporate tax on its profits. Later, a proportion of that tax is passed to the shareholders as a franking credit when the dividends are distributed. As a taxpayer you must include in your assessable income the dividends received as well as franking credits. When the tax payable is calculated on the grossed-up amount a resident taxpayer is generally entitled to a tax offset equal to the amount of franking credit included in his or her income.
If you are considering undertaking a project (eg. property development) you might be looking for a partner to join the assets, knowledge and expertise. What business structure is most suitable for you? Careful planning ensures that a proposed structure is tax efficient. You can set up a partnership or enter into a joint venture agreement. The tax treatment of a partnership differs from a joint venture.
As we start winding down and looking forward to the holidays over Christmas and the New Year, many of us make plans to visit friends and family interstate, or head overseas for a white Christmas. It’s a joyous time of year, one in which we are certainly not thinking about what would happen if our circumstances were to change dramatically.
If you consider purchasing a business you should bear in mind tax implications where the acquisition includes intangible assets (eg. intellectual property).
The property and assets belonging to a person who has died are called their deceased estate. This may include real estate, money in bank accounts, shares, and personal possessions.
When you are buying a business you may incur various initial expenses before the transaction is actually completed. These costs include legal fees to draft a contract or expenses to carry out a due diligence audit of the acquiring business and other incidental costs. The due diligence audit will assist you to gain a greater understanding about the business’s prospective earning capabilities, the position and competency of management, who the company primarily deals with in regards to customers and suppliers, what assets and liabilities they have, as well as their financial position.
Allowable deductions reduce taxable income; whereas, tax offsets directly reduce the amount of tax payable on your taxable income. They provide greater benefit. Often, tax offsets referred to as rebates. In general, tax offsets can reduce your tax payable to zero but on their own they can’t get you a refund.
It is an exciting time when new workers join your business. Meanwhile, it is crucial to determine if they are an employee or contractor before entering into an agreement or contract. Your business will need to keep records to support your decision on whether your worker is an employee or contractor and the factors you relied on. You may face penalties and charges if you incorrectly treat an employee as a contractor and don’t meet your obligations.