This document is a simplified version for special audiences. Please refer to www.ato.gov.au for further information.
The Tax Office is reminding business operators to register their business for the tax system or risk paying penalties and interest or, in more serious cases, facing prosecution.
Deputy Commissioner of Taxation, Erin Holland, said that the taxes for which business owners or operators should register will depend on how they operate their business.
"You may operate as a sole trader, a partnership, a trust or a company.
"All four have to register for a tax file number or TFN for short, however if you are a sole trader you can use your personal TFN while the other three need separate TFNs."
Ms Holland said the tax file number is used for identification and record keeping when dealing with the Tax Office.
"You don't need a new TFN if you only change the business name or address, but you do need to let the Tax Office know about these changes."
Ms Holland said all four business structures should also register for an Australian business number or ABN which is used when a business deals with other businesses, government departments and agencies or the Tax Office.
"If you don't have an ABN or if you don't provide one when doing business, other businesses may have to withhold tax at the top marginal rate from any payments they owe you."
"Businesses with an annual turnover of $75,000 or more must also register for the Goods and Services Tax or GST.
"That's so they can claim what's called a GST credit for any GST included in the price the business pays for goods or services.
"Businesses with an annual turnover under this threshold may also choose to register for GST so they can claim a credit for the GST paid.
"An exception to this rule covers taxi drivers who have to register for GST regardless of their annual turnover," she said.
Ms Holland said that any business employing people should also be registered for the tax withheld from their employees, otherwise known as 'pay as you go' withholding or PAYG.
She said pay as you go withholding applies to wages and salary and can also apply to directors fees and other payments made under labour hire arrangements or voluntary agreements.
"You would also withhold money under PAYG if an ABN was required, but not provided," she said.
To save time and effort, business operators can register for a tax file number, and Australian business number, goods and services tax and pay as you go on the one form that can be obtain from the Tax Office website at ato.gov.au or phoning the Tax Office on 13 28 66.
Ms Holland also recommends that employers register for fringe benefits tax or FBT, if they provide non-cash benefits to employees such as:
- the private use of a work car or other work equipment
- clothing that can be worn when they are not working
- private health insurance, or
- cheap loans, entertainment like tickets to sporting fixtures or other events or other goods and services.
She said some things are exempt from fringe benefits tax including:
- one laptop computer per employee per fringe benefits tax year
- mobile phones for business purposes
- taxi travel for business purposes
- some work-provided health care facilities, and
- minor benefits below a set value.
"Remember that the FBT year is different to the tax year as it runs from 1 April to 31 March," she said.
Business operators seeking more information about which taxes they should register for and how to register should visit the Tax Office website or phone the Tax Office on 13 28 66 during office hours.