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Taxes 101: How Does Australia Tax Online Businesses?

As they expand their businesses, Australian e-commerce innovators can benefit from the Fullstack eCommerce tax handbook's guidance. Today, the Australian online commerce market has grown by double digits over the last decade. Australia's robust internet infrastructure and thriving economy both contribute to the country's enormous $33 billion e-commerce business.


With all that being said, you might be here because you are curious about how Australia taxes online businesses today. Read on to find out.


COVID-19 and The Boom of the eCommerce Industry


The outbreak generated by COVID-19 in 2020-2021 increased eCommerce in Australia by $4 billion, resulting in the formation of new businesses. Despite the fact that e-commerce has helped small businesses increase their sales by $100,000 to $700,000, tax difficulties must still be addressed.


Online merchants, whether they are new or established, must fulfil their tax obligations in order to be successful. After all, when it comes to taxes, simple mistakes can quickly snowball into much bigger issues.


As such, owners of e-commerce businesses in Australia must be aware of the country's corporation tax legislation. Again, errors in tax administration will probably lead to more serious problems.


Taxes and the Company Structure


Before you can consider taxation for your internet business in Australia, you must first establish how your company will be constituted. Various business structures have different tax obligations.


Individuals, partnerships, corporations, or trusts can run online enterprises, depending on their organisational form.


Computing eCommerce Business Income Tax


Taxes for internet businesses operating in Australia can be calculated using both the cash and receipts technique and the profits and accrual approach. Choose the strategy that delivers the most accurate portrayal of your company's profit.


To calculate the amount of tax due for your online business, multiply its taxable income (revenue minus expenses) by the tax rate in effect for the current fiscal year.


The GST Registration


Goods and Services Tax (GST) is a 10% consumption tax paid on goods and services in Australia. This includes sales made on Amazon as well as Shopify.


If you expect to make $75,000 or more in annual sales, you must register for GST. GST must be paid, and returns must be filed with the ATO.


Claiming of GST Refunds (Back Expenses)


Your company can only collect GST on a portion of its costs; the entire amount cannot be recovered. Check that you have all of the necessary receipts before submitting a claim for goods and services tax on business expenses.


The Quarterly Submission of the BAS


Businesses operating online in Australia are required to produce Business Activity Statements (BAS) on a quarterly basis. Businesses must submit GST declarations to the ATO either quarterly or annually.


Businesses that register for GST voluntarily have the option of paying GST on an annual basis. If you sell on third-party marketplaces such as Amazon, you should generally look at your cash flow before deciding whether to pay GST quarterly or annually.


Conclusion


As we see the consistent rise of eCommerce in Australia, every online business owner must comply with tax rules and regulations. Now that you are knowledgeable of how Australia taxes online businesses, it should be less complicated for you to comply with tax rules to run your business more efficiently.


The ECommerce Accountant is your best bet for an eCommerce accountant in Australia. We assist online entrepreneurs with irresistible benefits, on top of our services. Call us today!


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