FAQs
NOBLE TAX GROUP
Frequently Asked Questions
What are the different types of business structures?
Businesses may operate under a number of different structures. The four most common types of business structures are
- Sole trader (sole proprietorship)
- Partnership
- Trust
- Company
A sole trader is a business that is owned by one person (typically called the “principal”). The profit of the business is entirely attributable to the owner.
A partnership is a business operated by two or more people. At the end of each financial year, the profit or loss of the partnership is distributed to each partner in accordance with their profit-sharing ratio.
A trust is a fiduciary relationship under which a person (called the trustee) holds and administers the property (assets) under the terms of a trust deed for the benefit of someone else (the beneficiaries of the trust). At the end of each financial year, the profit of the trust is distributed to the beneficiaries where the trust derives a net loss, the loss is not able to be distributed to the beneficiaries, but must be carried forward in the trust to be offset against the future profits.
A company is a separate legal entity. The owners of the company are called shareholders and their ownership interests are represented by shares in the company. Shareholders appoint directors to manage the business on their behalf. In small proprietary companies, shareholders are normally the directors.
Shareholders receive a share of the company’s profits via the distribution of the dividends.
DO I need to register for GST?
You need to register for GST if your GST turnover is more than $ 75,000.00 in one year. ($ 150,000.00 for not-for-profit organisation). If your turnover is less than $ 75,000.00, you could voluntarily register for the business. For the ride- shares you should register your business irrespective of your GST turnover.
I am a partner in a partnership, Could I receive salaries and wages from partnership?
A partnership is not a separate and distinct legal entity for income tax purposes and a partner cannot be an employee of a partnership. The payment of the salary to a partner is simply a means of distributing partnership income and payment is not deductible in calculating the net partnership income or loss.
What is a negative gearing and how it impacts in my tax returns?
If you have an investment property and if your expenses are more than your income in investment properties, you have a loss from investment properties. This loss is called negative gearing. Negative gearing will minimize your taxable income. The other part of the negative gearing is that it will add back its Adjusted Taxable Income.
What is the Personal Service Income (PSI)?
The income which is mainly a reward for an individual’s personal efforts or skills is known as the individual’s personal service (PSI), regardless of whether it is the income of another entity (e.g a company, trust, partnership, or another individual), whether it is for doing work or producing a result or whether it is payable under a contract. You can receive PSI in almost any industry, trade, or profession.
DO I need to register for ABN?
The Australian Business Number (ABN) is a business identifier that can be used for the GST and various other tax-related purposes. The ABN is issued by the Australian Taxation Office (ATO).
If you want to run the business, you should have an ABN. The ABN applies to the individual entity (company, sole trader, trust, partnership, etc). If you are carrying on more than one business, you will only have one ABN. Conversely, where a number of entities contribute to the running of a business, each will have to have a separate ABN.
Accounting Software WE USED:
