What is a tax loss?
A loss is made when the total deductions you claim exceed your income in the financial year.
Why are tax losses important?
It is important to know how to treat a loss when you are starting up a new company, as generally, most businesses will not make a profit in there first year of trading. This is often due to the initial investment in setting up the business and getting it running leading to a loss in the business until sales catch up. Continue reading “Tax Tip Tuesday: Can I use tax losses in my business?”
When starting out, one of the big decisions you’ll have to make is how to price your product or service. You’ll look at costings and competitors pricing coupled with other branding and marketing considerations to make this decision. One mistake we often see though is businesses not factoring GST into their pricing which leads to the question, ‘Do I need to charge GST?’.
Once your business is registered for GST (and the product or service you are selling attracts GST), you need to add 10% to your selling price. As your pricing must include 10% GST, it’s another price point which you need to be aware of. And when it comes to raising money on Pozible and Kickstarter, remember the same rules apply. Continue reading “Tax Tip Tuesday – Do I need to charge GST with that?”
With Bitcoin use increasing in Australia, there has been little guidance to date from the ATO and other regulatory authorities about the accounting and tax treatment of this payment method. So Nudge Accounting has put together a list of some of the key accounting and tax questions you may have when using Bitcoin.
If I make a sale from my business and the customer pays using Bitcoin, do I need to record the GST on the sale?
We can break this down into two components:
- When you make a sale to a customer, you should be issuing a valid tax invoice that includes GST if you are registered for GST. You will be required to remit this amount to the ATO the next time you lodge a Business Activity Statement.
- If you are not registered for GST, you cannot include a GST component on the tax invoice and you are not required to remit any portion of this sale as GST to the ATO.
Outcome: Yes, you are required to record the GST on this sale if you are registered for GST.
If I buy something for my business using Bitcoin, can I claim GST on the purchase?
- When making a purchase for your business and the supplier provides you with a valid tax invoice that includes their ABN and a GST amount, you are entitled to claim the GST back if you are registered for GST. This is irrespective of the currency you purchase the goods in.
- If the supplier provides you with a valid tax invoice that includes their ABN and there is no GST on the invoice, you are not entitled to claim any GST, even if you are registered for GST.
Outcome: Yes, you should be able to claim GST on eligible business purchases if you receive a valid tax invoice that includes GST and you are entitled to claim the GST.