Australia's income tax system is based on a self-assessment which initially assumes that the information provided by a taxpayer is accurate. Businesses, however, are required to maintain complete and accurate records to substantiate the amounts stated in the activity statements whenever they are required by the Australian Tax Office (ATO). Many small businesses rely on a smart system such as Quickbooks Online Small Business Accounting software for bookkeeping and providing accurate data used to prepare their activity statements.
Tax requirement
BAS
Businesses are required to lodge an activity statement periodically with the ATO. An activity statement is a form containing information on certain taxes a business must pay such as Fringe Benefits Tax (FBT), Pay As You Go (PAYG) installments, and Goods and Services Tax (GST).
The Business Activity Statement (BAS) may be lodged electronically, by mail or in person. This statement must be lodged on time to avoid the payment of penalties and surcharges. The due date for lodging the BAS can be found pre-printed on the top right hand corner of the statement.
All taxpayers are required to keep a record of the BAS and all records used to prepare it for 5 years after they are prepared, obtained or after the transaction was completed, whichever is the later date. Some accounting software such as Quickbooks online small business accounting system, assists businesses in preparing the BAS and submitting the completed form online.
Withholding taxes on wages
Employers are required to calculate taxes to be withheld from payments made to employees. The ATO has issued withholding tax tables to guide employers in computing the employees' tax burdens.
Superannuation contributions
Employers are required to pay super contributions for its eligible employees at least four times a year. When paid on time, the employer may claim the amount contributed as a tax deduction. Super contributions that are not paid on time are not allowed as tax deductions and will additionally be charged an interest rate and administration fee.
Small businesses rely on their accounting software in order to comply with tax rates and formulas relevant to them. In particular, Quickbooks online small business accounting software provides a complete service for recording data needed to prepare and lodge activity statements, calculate taxes to be withheld from workers' salaries, and the amount of super contributions to be paid on behalf of each employee. With quick and accurate recording, small businesses are able to lodge their activity statements and pay any amounts due on time.
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