abn question

[bundmum]

I have been thinking of getting an abn and I haven't been able to find the answer to my one (probably stupid) question.

If I get an abn do I have to pay tax even if my "business" hasn't made any money?

[Kadorite]

I'm no accountant, but if you didn't earn anything then there's no money to pay tax on IYKWIM? I had an ABN for years and only did a tax return with it once as the other years I hadn't used it.

[bundmum]

cool, thanks

[Shanaynay]

No. You do not pay tax until your business is making a profit and you have a taxable income.

There is a Aussie small business forum called 'Flying Solo' that is great help for that sort of info :)

[Girl X]

It depends on your circumstances and how you have set up your business. If you are registered for GST then you'll need to do a BAS return each quarter, and there may be money needing to be paid as a result. If you are GST registered you need to do the BAS return regardless of whether you have collected any money.

If more than a certain threshold (I believe c. $10k) goes through your ABN in one year then you have to be registered for GST.

If your business has made zero profit in a financial year then your net tax liability will be zero, but you may have to make tax payments at various points throughout the year if you make money in a quarter. You will get a tax credit if you then lose money in the next quarter.

I would advise talking to an accountant before setting up. Tax can be a headache, and it is not something you want to get wrong!

[bundmum]

No. You do not pay tax until your business is making a profit and you have a taxable income.

There is a Aussie small business forum called 'Flying Solo' that is great help for that sort of info :)

Brilliant! Thank you.

[fludo]

If more than a certain threshold (I believe c. $10k) goes through your ABN in one year then you have to be registered for GST.



The threshold before you need to register for GST is actually $75000. To be registered for GST means you have to charge GST to your customers, but it also means you can claim the GST you pay on business purchases.

Having an ABN didn't change anything about the way I did my tax. I'd already been running my business for years without an abn (didn't realise I needed one!) and the tax office never said anything even though I was filling in the business section of the tax form. I pay quarterly tax installments. You can even decide for yourself how much you want to pay each quarter. When I had my kids I had a few months where I didn't make any money so I didn't pay anything in those quarters. Then at the end of the year they work out if you owe more or get a refund.

[mum of annaliese]

you need an abn if you are running a business because if you dont then the person paying for your goods and services can withhold 47% of the price and remit that to the ATO (not that i have ever seen that happen in real life).

You will only pay tax when you have a taxable income - the tax free threshold is $6000 at the moment. Even if you dont make a taxable profit you still need to do the tax return so that you can carry forward your losses and then offset these against your profits in later years.

You will only be asked to pay quarterly instalments after you have lodged a tax return that shows either a tax payable or income from untaxed sources (eg: business income) of over $8000.

It is true that you can vary the instalemnt that the ATO give you but if you are going to vary it down then you must be very certain that the figure you hve come up with is correct because if you are wrong and underestimate your tax by a big margin then you will be hit with interest and penalties.

Also you will need to register for GST if your turnover (not profit) is over $75000 per annum. GST and tax are two totally different things and people often get them confused.

Two things to remember with tax though - 1. you can only ever get as much tax as you have paid back as a refund and 2. if you are due a refund you usually have to wait until the end of the tax year to collect it.