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Posts Tagged ‘Business Number’

The Importance of the Australian Business Number and PAYG Taxes

Wednesday, March 21st, 2012

Has your business registered an Australian Business Number yet? Aside from being one of the most important business acquisitions you will ever make, Australian Business Number will also allow you to open bank accounts, trade with other businesses, purchase domain names and build credibility in land-based and online marketplaces. Perhaps more importantly, your Australian Business Number will help you to bring in all the money that you are entitled to.

What is PAYG Withholding Tax?

PAYG withholding tax is applied to transactions where another business is paying money into your own operation. If your Australian Business Number isn’t included on the invoices that you send out, other businesses are obliged to hold back a percentage of the money for payment to the Australian Tax Office. Display it, and your invoices will be paid in full.

Everybody is obliged to pay tax on their earnings. An Australian Business Number shows other business entities that you have been in contact with the Australian Tax Office and that the government is aware that you work as a business entity. Tax income supports the economic growth of Australia and having valid identification in place proves that you are already making contributions.

The Australian Business Number and GST

Goods and Services Tax is charged at a rate of 10%, and it is now applied to the majority of consumer product and service purchases within the Australian marketplace. If your business turns over $75,000 or more every year, you will need an Australian Business Number to register for Goods and Services Tax. It will help you to claim GST relief and to claim fuel tax credits from the government.

PAYG Tax Exclusions

Under some circumstances, you can be excluded from paying PAYG withholding taxes even if you don’t have an Australian Business Number in place. If you are a non-profit organisation or charity, you will not be expected to make the 46.5% contribution and you won’t have to register for Goods and Services Tax until your annual turnover exceeds $150,000.

Withholding taxes will also be waived if an invoice is sent out for any sum of $82.50 or less, and you will not have to make contributions if you are less than 18 years of age, the employee of a company or receiving payments of $120 or less each week. Under these circumstances, you will need to provide a written statement to clarify your position.