The extract below is from the Australian Taxation Office. This information provides a basic summary of general trust tax return and associated trust tax and business tax reporting obligations.
Trust Tax Returns
Looking for cost-effective company, trust, or partnership tax returns? Taxopia offers professional and affordable solutions to help you stay compliant with annual business tax and accounting lodgements.
About Trust Tax Returns
Taxopia is Australian owned and based in Melbourne.
Trust
Setting up a trust can be expensive, as a formal deed is required and there are formal yearly administrative tasks for the trustee to undertake. A trust deed outlines how the trust will to operate.
A trustee is legally responsible for the operation of the trust. The trustee can be an individual or a company. Profits from the trust go to beneficiaries.
The main features of a trust business structure are:
- a trust must have its own TFN for lodging its annual tax return and must show all income and deductions of the business, plus any distributions to its beneficiaries
- a trust must have its own ABN
- a trust must be registered for GST if annual turnover is $75,000 or more ($150,000 for non-profit organisations)
- a trust may be liable to pay tax depending on the wording of its deed and whether any income the trust earns is distributed to its beneficiaries
- the trust may be able to access tax concessions
- beneficiaries of the trust may be liable to make Pay As You Go (PAYG) instalments on distributions they receive from the trust
- the trust must pay super for any of its employees (this may include the trustee if they are also employed by the trust).
Who pays income tax?
How the trust income is (or is not) distributed to its beneficiaries is what determines if the trust pays tax.
Where all trust income is distributed to adult resident beneficiaries, the trust is not liable to pay tax.
Where all or part of the net trust income is distributed to non-residents or minors, you as the trustee are assessed on that share on behalf of the beneficiary. In this case, the beneficiaries must declare that share of net trust income on their individual income tax returns, and also claim a credit for the amount of tax you paid on their behalf as the trustee.
Where the trust accumulates net trust income, as the trustee you are assessed on that accumulated income at the highest individual marginal rate.
Personal services income A trust may treat income and deductions relating to personal services income (PSI) differently. The income may be treated as your individual income for tax purposes. Taxopia online tax accountants can assist you with any structural trust tax questions. We have very cheap trust tax return solutions for your trust. Contact us today on 1300 829 674
Available plans to choose from
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Please note that ALL our plans exclude the following:
- Capital Gains Tax events
- Share Trading activities
- Fixing GST errors
- Companies who have Director(s) or Shareholder(s) loans owing to the company. (Division 7a)
Please contact us for a customised quote if you require help on any of the excluded items.
Your Company Tax Return Questions answered
What’s the difference between the Company Tax Return packages?
For Company Tax Returns, we have four tax service packages: Taxopia Online Lite ($190 + GST) – A complete self-service option. You enter all the information online and post the lodgement yourself. Once done, we will email you the completed Tax Return and provide you with the instructions on what to do (you will need access to a printer) and where to post it.
Note: This option is only for standard “Pty Ltd” companies. Basic Tax Reporting ($425 + GST) – Our accountant prepares and lodges your returns for you. This option allows for bookkeeper software access. Standard Tax Reporting ($850 + GST) – As above but with complete financial reports (for bank use) and provides greater support. Premium Tax Reporting ($1,300 + GST) – For bigger companies with a turnover of $1M or above per year and provides a dedicated Accountant & Partner Support. The Basic, Standard and Premium packages are for companies, trusts, and partnerships. For more information on each option, click here.
How are our Company Tax Returns completed so cheaply?
At Taxopia we spend a lot of time innovating and improving staff skills, workflow processes and systems. We exclusively use paperless systems for work papers and other documents. All client documents are signed with the highly secure electronic signing system “Docusign”. This is great for the environment but it’s especially good for our clients because (a) it saves them time and (b) every time we find a faster way of doing something we revisit our pricing to see if we can make things cheaper for our clients. We want to deliver the cheapest professional business accounting and tax solutions in Australia. That’s our goal.
What documents do I need to submit to complete my online company tax return?
In order for your tax returns to be processed online and prepared accurately by our accountants, you’ll need to prepare documents such as profit and loss statements, balance sheets, records of expenses, invoices, receipts and other financial records.
Can I submit documents required for my company tax return at a later time?
Yes. You may submit your documents via email at a later time if you don’t have them handy while filling out our online tax return form. Our accountants will be reminding you to send them via email correspondence as well.
Can I save my online company tax return form and get back to it later?
Absolutely. You can save your online tax return form by clicking SAVE AND RESUME LATER located at the bottom of the form. Once you click it, a prompt to create a password you can use to access your form later will show up. Type a password that is secure and is easy to remember. After creating a password, you’ll have to click SAVE AND GET LINK. You’ll be taken to a new page where you are given a link to your form. You may copy that link and use that to go to your form later or you may enter your email address and hit SEND SAVE AND RESUME LINK to get your form link sent to your email.
How is the taxable income of a company calculated for tax purposes?
Absolutely. You can save your online tax return form by clicking SAVE AND RESUME LATER located at the bottom of the form.
- Once you click it, a prompt to create a password you can use to access your form later will show up. Type a password that is secure and is easy to remember.
- After creating a password, you’ll have to click SAVE AND GET LINK. You’ll be taken to a new page where you are given a link to your form.
- You may copy that link and use that to go to your form later or you may enter your email address and hit SEND SAVE AND RESUME LINK to get your form link sent to your email.
What are the available tax deductions for Australian companies?
For these details, it’s best to consult with one of our accountants, but to give you an idea, various tax deductions available for Australian companies include business expenses, employee salaries, depreciation, and research and development expenses among others.
What is the ATO’s Technology Investment Boost
The Australian Taxation Office (ATO) has recently introduced a two new tax incentives and it aimed to assist small businesses to adopt and leverage digital technology to enhance business efficiency and strengthen its capacity to overcome challenges.
If you have expenditures relating to technology investment and skills/training to employees, the ATO will give you a 20% bonus deduction on top of any qualifying deductions you are entitled to.
Who is required to file a company tax return in Australia?
In Australia, all companies, including foreign-owned and not-for-profit companies, are required to file a company tax return with the Australian Taxation Office (ATO). Even if your company was not profitable or had no tax to pay your company is still required to lodge a tax return. If the company had no activity in a given year it is possible to lodge a no return required in certain circumstances.
What is the deadline for filing a company tax return in Australia?
Deadlines for filing a company tax return in Australia will depend on your business structure, if you use the services of a tax agent, and if you have any overdue prior year lodgements
- Sole trader – 31 Oct, unless lodged through a registered tax agent*
Sole traders’ business income must be declared in the individual tax return. - Partnership – 31 Oct, unless lodged through a registered tax agent*
The share of the partnership income needs to be declared in the individual tax return, and the partnership itself will also need to lodge a partnership return. - Trust – 31 Oct, unless lodged through a registered tax agent*
Any trust distribution to beneficiaries must be declared in their individual tax return. The trust itself will also need to lodge a trust return. - Company – Generally 28 Feb, unless lodged through a registered tax agent*
Any salary, wages, director’s fees, or income from dividends must be declared in the individual tax return due on 31 Oct. The company itself will also need to lodge a company tax return 1.
Taxopia is a registered tax agent, so when you use any of Taxopia’s serviced tax returns to lodge your company or individual tax returns, you will be entitled to an extension. This includes:
What documents and information are needed for filing a company tax return?
It is essential to keep accurate and detailed records throughout the financial year to facilitate the company tax return preparation process. The specific documents and information needed for filing a company tax return may vary depending on the nature and size of your business, but common ones include:
- Financial Statements
- Profit and loss statement
- Balance sheet
- Business Records
- Sales records and invoices
- Purchase records and invoices
- Bank statements
- Petty cash records
- Employee Payroll Information
- Payment summaries or income statements for employees
- Superannuation records
- Goods and Services Tax (GST) Information
- Details of GST collected and paid
- Business activity statements (BAS) and relevant documentation
- Asset Records
- Details of assets acquired or disposed of during the financial year
- Depreciation schedules
- Record of dividends and distribution paid to shareholders.
- Loan and Debt Information – including interest paid or received
- Tax Offsets and Deductions
- Information on any eligible tax offsets and deductions
- Documentation supporting claims for deductions
- Business Expenses
- Records of all business-related expenses, including receipts and invoices
- Travel expenses, meals, and entertainment records
- Company’s Tax File Number (TFN)
- Company’s Australian Business Number (ABN)
- Company Details – including company structure, directors & shareholders
- Copy of the previous year’s tax return for reference
- Financial Institution Details – including interest earned or paid, and bank account information.
- Records of Capital Gains and Losses from the sale of assets
- Research and Development (R&D) – Records related to R&D activities and eligible expenses (if applicable)
- Legal entity information about the company’s legal structure, business activities, and industry classification
To ensure that all relevant documentation is in order and that the company complies with tax laws and regulations, seek guidance from a tax professional, such as Taxopia, to assist you with your company tax returns.
How is the company’s taxable income calculated for tax return purposes?
A company’s taxable income is calculated by taking the company’s assessable income and subtracting any allowable deductions. The key components include:
- Assessable Income:
- Sales Revenue: Includes income from the sale of goods or services.
- Interest and Dividends: Income earned from investments or shareholdings.
- Rent and Royalties: Income generated from renting property or receiving royalties.
- Capital Gains: Profits from the sale of assets.
- Allowable Deductions:
- Business Expenses: Deductible business expenses incurred in generating assessable income, including rent, wages, utilities, and office supplies.
- Cost of Goods Sold (COGS): Direct costs associated with producing goods or services.
- Depreciation: Deduction for the wear and tear of assets used in the business.
- Bad Debts: Deduction for debts that are unlikely to be recovered.
- Research and Development (R&D) Costs: Certain R&D expenses may be eligible for deductions.
- Superannuation Contributions: Contributions made to employees’ superannuation funds.
- Interest Expenses: Deductible interest paid on business loans.
- Non-Deductible Expenses – Private expenses or expenses not related to the generation of assessable income are generally not deductible.
- Tax Offsets – Franking credits or small business tax offsets, may be applied to reduce the tax liability.
- Carry-Forward Losses – If a company incurs a tax loss in a particular year, it may be able to carry forward that loss to offset against future profits.
- Dividends Received Deduction – Some dividends received from Australian resident companies may be eligible for a deduction.
What are the common deductions and credits available for companies in Australia?
While you can claim a tax deduction for most expenses that are directly related to earning your assessable income, there are 3 golden rules for what the Australian Taxation Office accepts as a valid business deduction:
- The expense must be related to your business and qualify as an allowable deduction, not for private use.
- If the expense is for a mix of business and private use, you can only claim the portion used for your business.
- You must have records to prove it.
Some common deductions and credits available for companies in Australia include:
- Business Expenses:
- Operating Expenses: Deductions for day-to-day running costs, including rent, utilities, office supplies, and insurance.
- Wages and Salaries: Deductions for employee salaries, wages, and superannuation contributions.
- Travel Expenses: Deductions for business-related travel expenses, including accommodation and meals.
- Cost of Goods Sold (COGS) – Deductions for the direct costs associated with producing goods or services.
- Depreciation – Deductions for the decline in value of assets used in the business, such as machinery or equipment.
- Research and Development (R&D) Tax Incentive – Companies engaged in eligible R&D activities may be eligible for tax incentives and offsets.
- Bad Debts – Deductions for debts that are unlikely to be recovered.
- Small Business Instant Asset Write-Off – Small businesses may be eligible to immediately deduct the cost of eligible assets purchased, subject to certain conditions.
- Car Expenses – Deductions for the business-related use of vehicles.
- Home Office Expenses – Deductions for expenses related to operating a home office, if applicable.
- Fringe Benefits Tax (FBT) Exemptions – Certain benefits provided to employees may be exempt from FBT.
- Dividends Received Deduction (DRD) – Deductions for dividends received from Australian resident companies.
- Franking Credits – Credits for the tax paid by the company on its profits, which can be passed on to shareholders through franked dividends.
- Small Business Income Tax Offset (SBITO) – Small businesses may be eligible for a tax offset that reduces the tax payable on their business income.
- General Business Tax Credits – Credits for taxes paid, including payroll tax and other state-based taxes.
- Export Market Development Grant (EMDG) – Grants to assist businesses in promoting products or services in international markets.
- Superannuation Contributions – Deductions for contributions made to employees’ superannuation funds.
- Environmental Protection Expenses – Deductions for eligible expenses incurred for environmental protection activities.
- Company Losses Carry-Forward – Companies can carry forward tax losses to offset against future profits.
Are there specific industry-specific tax considerations for company tax returns?
Yes, there are specific industry-specific tax considerations that companies need to consider when preparing their tax returns in Australia. Tax laws and regulations vary across industries, and certain sectors may have unique provisions or incentives. Here are a few examples of industry-specific tax considerations:
- Research and Development (R&D) Tax Incentives – Companies engaged in eligible R&D activities may qualify for tax incentives, including a refundable tax offset or a non-refundable tax offset.
- Mining and Resources – This sector may have specific deductions and provisions related to exploration and development expenses, depreciation of assets, and environmental protection activities.
- Agriculture – Agricultural businesses may benefit from specific provisions related to income averaging, deductions for primary production assets, and tax incentives for water facilities.
- Construction and Building – Construction companies may have considerations related to capital works deductions, depreciation on construction equipment, and small business concessions.
- Technology and Innovation – Technology companies may explore tax incentives for R&D activities, as well as deductions for technology-related expenses and intellectual property.
- Healthcare and Medical Services – Healthcare businesses may have specific deductions for medical equipment, research activities, and expenses related to healthcare services.
- Education and Training – Educational institutions and training providers may have deductions related to education resources, staff training, and other industry-specific expenses.
- Tourism and Hospitality – Businesses in the tourism and hospitality sector may have specific considerations related to deductions for marketing expenses, depreciation on hospitality assets, and tourism-related initiatives.
- Real Estate – Real estate companies may have considerations related to capital gains tax (CGT) on property transactions, deductions for property management expenses, and depreciation on investment properties.
- Financial Services – Financial institutions may have specific tax considerations related to financial products, provisions for bad debts, and compliance with regulatory requirements.
How can a company ensure compliance with tax regulations during the tax return process?
To ensure compliance with tax regulations during the tax return process, you’ll need to consider the following points:
- Maintain Accurate Records – Keep meticulous and organised records of financial transactions, expenses, and income. Accurate record-keeping is essential for preparing a precise and compliant tax return.
- Understand Deductions and Credits – Familiarise yourself with eligible deductions and credits applicable to your industry. Ensure proper documentation is in place to support any claims.
- Use Technology Solutions – Leverage accounting and tax software to streamline processes and reduce the risk of errors such as Xero. Automation can improve efficiency and accuracy in tax reporting. Taxopia offers Xero bookkeeping support to help your business get started or provide help with using Xero. Click here to learn more:
https://taxopia.com.au/xero-bookkeeping-support/ - Review Business Structure – Periodically assess the company’s business structure to ensure it aligns with current goals and optimises tax efficiency. Changes in structure may have tax implications.
- Adhere to Lodgement Deadlines – Be aware of tax lodgement deadlines and prioritise meeting them. Late lodgements can result in penalties and interest charges.
- Implement Internal Controls – Establish internal controls to monitor and verify financial transactions. This helps identify errors or discrepancies early on and ensures accuracy in financial reporting.
- Tax Planning Strategies – Implement tax planning strategies that align with the company’s objectives. This may involve timing income recognition, managing deductions, and optimising the overall tax position.
- Employee Training – Train employees responsible for financial and tax-related tasks. Ensure they understand compliance requirements and are updated on any changes in tax regulations.
- Conduct Internal Audits – Periodically conduct internal audits of financial records and tax-related processes. This proactive approach helps identify and rectify potential issues before they escalate.
- Seek Professional Advice for Complex Transactions – For complex transactions or significant changes in business operations, seek professional advice. This ensures compliance with intricate tax regulations and optimises tax outcomes.
- Maintain Communication with Tax Authorities – Establish open lines of communication with tax authorities. Respond promptly to inquiries and provide requested information to demonstrate transparency and cooperation.
- Document Compliance Processes – Document internal processes and procedures related to tax compliance. This documentation serves as a reference and aids in training new staff.
- Stay Informed – Regularly update knowledge on tax laws and regulations. Subscribe to official tax updates, and consult with tax professionals to stay current with any changes.
- Engage Tax Professionals – Work with qualified tax professionals who have expertise in the relevant jurisdiction. Their knowledge can help interpret complex tax laws and ensure accurate compliance.