Budgeting for your organisation’s tax obligations is the same as budgeting for any other expense. You will need to work out how much tax your organisation has to pay and then put enough money aside to cover the tax bill when it is due.
Because tax bills are often payable on a quarterly or yearly basis, they may be overlooked when you budget for more frequent bills or expenses. When the time comes to pay your organisation’s tax bill, you may find that the money is not there, or you may have to find extra money because your bill is larger than you anticipated.
The following suggestions will help you to budget for your tax:
GST reporting: Even if you are eligible to report your organisation’s GST quarterly or annually, consider reporting monthly. Monthly tax periods may suit your organisation if it is likely to claim a GST refund regularly, for example, if your organisation has a large volume of exports compared with taxable sales, or if your organisation is likely to be making large outlays for capital equipment. You can claim GST credits sooner if your organisation has monthly tax periods.
Income tax: Estimate your organisation’s income for the current financial year and its likely tax liability. Update your organisation’s projection during the year as more information on sales and expenses becomes available.
Record keeping: Save time and effort by using an electronic record keeping system. E-Record, a basic electronic record keeping system is available from the Tax Office. You can obtain a copy of e-Record by downloading e-Record from the Tax Office website.
Alternatively, there are a number of commercially available products. To find commercially available software that will assist you to meet your tax obligations, visit our Product Register at www.ato.gov.au/softwaredevelopers
Voluntary payments: You can make a voluntary or early payment to offset a future liability. You can do this by BPAY® or direct credit using your EFT code. Alternatively, you can request a book of personalised payment slips and use these to either pay over the counter at Australia Post or to send with a cheque through the mail.
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