In Australia, there are varying forms on indirect taxes including Goods and Services Tax (GST), Payroll Tax, Luxury Car Tax, Wine Equalisation Tax and Fuel Tax to name a few. Being on top of these taxes and understanding how they relate to your business can affect your cash flow either positively or negatively.
There are many rules and requirements in relation to the above taxes. The most common impact in your business is from Goods and Services Tax “GST”. Please see the following common areas that may require additional focus:
- Import of Stock – GST is payable on the import of goods into Australia. This tax is charged by customs before the goods are released at the point of entry. Your invoice from your agent will usually include Freight costs, customs duty, handling fees and the GST on import. Please ensure your GST on this transaction is the amount noted on the invoice and not ten percent of the total of the invoice.
- Sale of Fixed Assets – When your business is registered for GST, you are also required to include GST on the sale of business assets. Partial exceptions can apply when selling assets only partially used in the business such as a motor vehicle with a private use proportion.
- Luxury Car Limit – You are able to claim the GST on a vehicle used in your business up to the luxury car limit of $67,525 for the 2019-2020 financial year. The GST proportion on the purchase price over this limit is added to the vehicle purchase price however the depreciation for tax purposes is limited to the Luxury Car Limit.
- Insurance Policies – Insurance policies include a stamp duty component, Stamp duty is GST free however the balance of the policy includes GST. Please ensure you record the purchase with the GST amounts as shown on your insurance invoice.
The taxation system in Australia is based on self-assessment of returns or statements lodged by the business. Calculations of the particular tax expense can be complex and your local Accru advisor is available to help with your, Monthly, Quarterly or Annual requirements.
Following calculation of the tax liability arises the critical factor for all business, HOW AM I GOING TO PAY THAT. Cash flow is king and juggling the various obligations is often very difficult for business owners.
How do you manage these funding demands on your business? The answer is budgeting and cash flow projections. Annual, Quarterly and Monthly budgets and cash collection projections are critical in accurately projecting your ongoing operations performance and the cash flow that will be available to meet the projected expenditures.
Only when you know your current situation and projected requirements can we be proactive in obtaining solutions to cover any short term funding requirements.
Your local Accru Advisor can help you with your budgets and cash flow projections to ensure you are prepared for the future. Get in contact today!