Tag Archives: Corporations

Comparing Tax Structures

There are several different tax structures in Australia, each with its own rules and requirements. The most common tax structures in Australia are:

  1. Individual Tax Structure – This is the tax structure that applies to individuals who earn income from employment or other sources. The tax rates are progressive, which means that higher earners pay a higher percentage of their income in tax.
  2. Company Tax Structure – Companies in Australia are taxed on their profits at a flat rate of 30% for most companies. However, small businesses with a turnover of less than $50 million can qualify for a lower tax rate of 25%.
  3. Trust Tax Structure – A trust is a legal structure that allows for the holding and distribution of income or assets. Trusts can be used for a range of purposes, including estate planning, asset protection, and tax planning. Trusts are taxed differently depending on the type of trust and how income is distributed.
  4. Partnership Tax Structure – A partnership is a business structure in which two or more people share ownership and profits. Partnerships are not taxed as a separate entity, but instead, each partner is responsible for paying tax on their share of the partnership’s income.
  5. Superannuation Tax Structure – Superannuation is a tax-effective way to save for retirement in Australia. Contributions to superannuation are taxed at a concessional rate, and investment earnings within the superannuation fund are also taxed at a lower rate than individual tax rates.

It’s important to understand the tax implications of each structure before choosing one for your business or personal finances. Consulting with a tax professional can help you determine the most suitable tax structure for your situation.

Single Touch Payroll & Super compliance

Single Touch Payroll (STP) is a government initiative in Australia that requires employers to report their employees’ payroll information to the Australian Taxation Office (ATO) every time they pay their employees. The reporting is done through the employer’s payroll system, which sends the data directly to the ATO.

STP was introduced to simplify the process of reporting payroll information to the ATO and to ensure that employers are meeting their tax and superannuation obligations. The ATO uses the information reported through STP to calculate the correct amount of tax and superannuation that should be paid by employers.

Superannuation compliance in Australia refers to an employer’s obligation to contribute a portion of their employees’ earnings to a superannuation fund. The current rate of contribution is 10% of an employee’s ordinary time earnings. Employers are also required to report and pay their employees’ superannuation contributions on time to avoid penalties.

STP reporting includes information about superannuation contributions, so employers who are compliant with STP are also meeting their superannuation compliance obligations. STP reporting makes it easier for employers to manage their payroll reporting and ensure they are meeting their tax and superannuation obligations.

Corporations

Types of Australian Corporations

In Australia, there are several types of corporations that can be established, including:

  1. Proprietary Limited Company (Pty Ltd) – This is the most common type of business structure in Australia and is suitable for small to medium sized businesses. It has limited liability and is required to have at least one director and one shareholder.
  2. Public Company Limited by Shares (Ltd) – This type of company can have an unlimited number of shareholders and can raise capital by issuing shares. It is required to have at least three directors and a minimum of seven shareholders.
  3. Australian Registered Scheme (ARS) – This type of corporation is used for managed investment schemes, such as unit trusts and property trusts.
  4. Co-operative – This is a business structure where the members own and control the company. It is used for businesses that are owned and controlled by their members, such as agricultural cooperatives or consumer cooperatives.
  5. Partnership – A partnership is a type of business structure where two or more individuals carry on a business together.
  6. Sole Trader – This is the simplest form of business structure, where a single person operates the business and is responsible for all its debts.

Each type of corporation has its own unique characteristics and requirements, and it’s important to consider the specific needs and goals of your business when choosing which type of corporation is right for you.

Call 02 8358 5553 Get in Touch