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Learning What Online Business Tax Is All about in Australia

Australia has a large and growing ecommerce market, which has been increasing at a double-digit rate for the past decade. The Australian ecommerce market is worth over $33 billion and is supported by strong internet infrastructure and a healthy economy.

Additionally, the COVID-19 pandemic caused a surge in ecommerce businesses and startups in Australia. These businesses have seen an increase in revenue of $100,000 to $700,000. However, these businesses need to be aware of the tax obligations they have incurred to avoid any penalties. This is true for both new ecommerce startups and existing businesses. Small mistakes can lead to big problems down the line, so it is best to be as prepared in all aspects, hence the need for a taxation accountant.

The Australian ecommerce market is subject to several taxes, including GST, income tax, and customs duty. Today's article will provide an overview of the key tax obligations for businesses operating in this market, including how to calculate and report tax.

Start with Your Business Structure

The first step to understanding your online business taxes in Australia is to know which business structure your company falls under. This is because different business structures have different tax implications and requirements. Once you know your business structure, you can research the specific taxes that apply to your business.

Structures have four categories, such as:

  • Sole trader.

  • Partnership.

  • Company.

  • Trust.

Next, Calculate

The receipt and cash method are best for businesses that are paid in cash or after providing their goods or services. This method is simple to calculate as you only include revenue when you have received payment. The earnings and accrual method is more complex, but it provides a more accurate picture of your business’ profit, including revenue when earned, not received.

To calculate the tax you owe for your online business, take your annual revenue and subtract any expenses. This will give you your taxable income. Multiply this number by the tax rate that applies to your business. The result is the amount of tax you owe.

Register for GST If Needed

GST is a 10 percent tax added to the cost of goods and services sold in Australia. This includes purchases made through online platforms like Amazon and Shopify.

If you think you will earn more than $75,000 a year, you must sign up for GST with the Australian Taxation Office (ATO). This also means you have to regularly give them updates on your earnings and pay them any GST you owe.

You may get money back from the government for GST paid on business expenses, but only some purchases are eligible. Look at your receipts to see if GST was charged on the item before you try to claim it back. Or, get the help of a taxation accountant to do it for you.

Submit Quarterly BAS Statements

Your responsibility as a business owner is to ensure your quarterly BAS statements are up-to-date and accurate. If not, you may be subject to penalties from the ATO.

In Summary

Getting your online business tax payments right begins with determining what kind of business structure you fall under. You can start computing, paying, and even claiming some GST funds via expenses. Keep these in mind so you don’t end up with hefty fines by the quarter’s or year’s end.

Or, You Could Hire Me, The Ecommerce Accountant, to Do the Work for You

As a taxation accountant in Australia, I provide my clients with accounting and compliance, goal setting and monitoring, cash flow forecasting, and much more. Call me now at (07) 5504-1999 or visit my website to get an overview of all my services.

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