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Income tax return: what to report

The time to report and lodge your annual tax return for your business is fast approaching. Remember, what you must report will depend upon the type of business entity you have.

Sole traders
As a sole trader, you are required to lodge a tax return even if your income is below the tax-free threshold. This will include:
– tax return for individuals including the supplementary section
– business and professional items schedule for individuals.

You must report:
– The business income minus the business deductions you are eligible to claim.
– The other income like wages and salary (from a payment summary), rental income and dividends, minus deductions against this income.

Partnerships and partners
The partnership must lodge a partnership tax return. This will include the partnership’s net income (assessable income less allowable expenses and deductions).

The ATO does not require the partnership to pay tax on the income it earns. Rather, every partner must pay tax on the share of net partnership income you each receive.

For you (as an individual partner) you must report:
– Your share of the partnership net income or loss.
– Any other assessable income like wages and salary (shown on a payment summary), dividends and rental income.

Trusts and Beneficiaries
When you operate your business through a trust, the trustee will be required to lodge a trust tax return. The trust reports its net income or loss (the trust’s assessable income minus deductions).
Each trust beneficiary must lodge their tax return, i.e., an individual or company tax return.

As a beneficiary of a trust, you must report:
– Income received from the trust.
– Other assessable income including dividends, salary and wages (on an individual’s payment summary), and rental income.

Companies
You must lodge a company tax return. The company is required to report its taxable income, tax offsets and credits, PAYG instalments and the amount of tax it is required to pay on that income or the amount that is refundable. Your personal income is kept separate from the company’s income.

With deregistered companies – ensure you lodge a final company tax return before it is deregistered by the Australian Securities and Investments Commission (ASIC). The ATO will be unable to process a company tax return if the company is deregistered.

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What to consider when consolidating your super

August 27, 2020

The ATO reported that 45% of working Australians were not aware that they had multiple super accounts in 2016. Having multiple super accounts is particularly common for individuals who have had more than one job. If this is you, it is important to identify and manage your super accounts because having more than one can be costly as a result of account fees from multiple funds.To combat this, you may want to consolidate your super, which moves all your super into one account. Not only does this save on fees, but it also makes your super easier to manage and keep track of.

Before consolidating your super, it is important to do the following:

Research your funds’ policy
Compare your active super accounts so you can make the right choice about which one you should close. Things to assess include:

Check employer contributions
Changing funds may affect how much your employer contributes, as some employers contribute more to certain funds. Check your current accounts to see if changing funds will affect this. Once you have selected a super fund, regardless of whether you choose a new super fund or one of your existing ones, provide your employer with the details they need to pay super into your selected account.

Gather the relevant information
When consolidating your super, you will need to have the following details ready: