If you’re running an e-commerce business, understanding online business taxes in Australia is essential knowledge. If you don’t manage your taxes effectively, small mistakes can turn into bigger problems down the track.
In this article, we’ll outline the online business taxes in Australia that you need to be aware of, as well as how to stay on top of your obligations.
Which business structure are you operating under?
Before we can get into online business taxes in Australia, you need to know which business structure your online business operates under. This is because there are different tax implications and obligations for different business structures.
Business structures for online businesses include;
- Sole Trader
- Partnership
- Company
- Trust
Calculating income tax for your online business
When calculating your online business taxes in Australia you can opt for either the receipt and cash method or the earnings and accrual method. The method you choose will depend on which method most accurately reflects your business’ profit.
To calculate the tax of your online business, you’ll need to multiply the taxable income of your business (revenue – expenses) with the applicable tax rate for the financial year.
Do you need to register for GST?
GST (or Goods and Services Tax) is the 10% tax that is added to goods and services purchased by Australian consumers. This includes goods and services sold through middle-man platforms like Amazon and Shopify.
If you anticipate that your annual revenue will be $75,000 or more, then you need to register and account for GST. You will also be required to lodge returns and pay GST owed to the ATO.
Claiming GST back on expenses
It’s possible to claim some of your GST back on expenses incurred by your online business, however it’s important to note that not every expense is subject to GST. Check your receipts to see whether you’ve been charged GST on a business expense before making a claim.
Submitting your quarterly BAS statements
When it comes to online business taxes in Australia, one important obligation to uphold is your quarterly BAS statements, or Business Activity Statements. These statements outline how much GST you owe the ATO and must be paid either every quarter or annually.
You can opt to pay your GST annually if you are a voluntarily-registered business for GST. You may wish to evaluate your cash flow before deciding whether or not to pay your GST quarterly or annually, especially if you sell on third party platforms like Amazon.
Unsure about online business taxes in Australia? Talk to the team at Infinity22
Understanding your obligations and online business taxes in Australia is vital to ensuring the smooth operation of your online business.
Infinity22 offers a range of financial services to online business owners, and we specialise in ecommerce. We can assist you with professional accounting, bookkeeping, business structure and financial strategies.
Talk to our friendly team today by giving us a call on (61) 452 184 421.