New Year, New You, New Tax Resolutions

New years come with new resolutions but while promises to eat healthier or exercise more are important, there’s one area where you can’t afford to be lax – your taxes. With the Commonwealth penalty unit amount for failure to meet tax obligations increasing to $275 from 1 January 2023, there’s never been a better time to take your taxes seriously.

1. Know if you’re in a business or not

While the likelihood of someone unknowingly starting a business does seem a bit ludicrous, there’s always a possibility that you’re considered to be in a business for tax purposes. For example, are you earning an increasing income from a hobby?

Not 100% sure if your activities could be classified as a business from a tax perspective? The ATO has provided this helpful guide for working out whether you’re in business and when your business starts for tax purposes.

2. Keep your business details and registrations up to date!

This is much easier said than done but good places to start are:

  • If you’re the director of an Aussie company, have you applied for your director ID yet?
  • Keep your ABN details updated – Emergency services and government agencies use this information to support businesses during disasters.
  • If you’re going to be earning over $75,000 this financial year, it’s time to register for GST!

3. Keep accurate and complete records!

As a business, you must keep detailed records of all transactions related to your tax and superannuation affairs as you start, run, sell, change or close your business. Keeping accurate and complete records for all your business transactions will also help you manage your business and its cash flow.

4. Work out if Personal Services Income (PSI) rules apply to you!

PSI is income produced mainly (more than 50%) from your skills or efforts as an individual, rather than being generated by the use of assets, the sale of goods, or a business structure. If you’re earning PSI, you’ll need to work out if you’re a personal services business to determine whether the PSI rules apply to your income. 

These rules will affect how you report your income and the deductions you can claim.

5. Look after yourself!

The last few years have thrown some curve balls at small businesses, so it’s good to be prepared. If you’re struggling, the NewAccess program can help. It’s free, confidential and designed for small businesses doing it tough.

If you’re worried that you can’t meet your tax obligations, it’s important to reach out for help early on. Let us understand your circumstances so we can provide the right advice and the right support tools when you need them most.

Keep you and your business on track to thrive in 2023 by staying on top of your tax and super obligations in 2023. 

Source: Australian Taxation Office | Compiled & Edited by Tailored Accounts

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