What is a business?
Business structures
Running a business - tax obligations
Business taxes
How is business tax collected?

100

What is a business?
A business is any activity which sells goods or services with the intention of making a profit.

100

What is a sole trader?
An individual who owns and runs a business in their own name.

100

What is PAYG withholding?
If your business has employees, you must withhold tax amounts from their wages and salaries. This holding must be forwarded to the ATO on a regular basis.

100

At what rate is GST charged in Australia?
10% on most goods and services. There are some exempt items such as wages which do not attract GST.

100

What is a business activity statement?
A business activity statement (BAS) is a form used to report and pay a number of tax obligations.

200

How does a hobby differ from a business?
A hobby is not set up with the aim of making a profit. Any profit from a hobby is not taxed.

200

How are the profits made by a partnership shared?
Profits are shared equally or as laid down in the partnership agreement.

200

What factors are taken into account when deciding the amount of tax to withhold? (PAYG withholding)
Tax-free threshold. Any eligible tax offsets. Existing HELP debt.

200

Name three items that attract excise duty.
Alcohol. Tobacco. Petroleum and alternative fuels.

200

Name two taxes a business will report on an activity statement.
Two of the following: • GST collected and paid out • PAYG instalments • PAYG withholding • FBT instalments owed by the business.

300

What is an Australian business number (ABN)?
A unique 11 digit number used to identify a business or other entity.

300

What is meant by the term 'limited liability' in relation to companies?
This means the shareholders (owners of the company) are generally not liable for the business debts beyond any unpaid amounts relating to their shares.

300

What is the minimum rate that employers must contribute in superannuation for their eligible employees?
9.5% of their ordinary time earnings.

300

List two features of company tax.
Company tax is levied at a flat rate of 30% on company taxable income. Companies do not have a tax-free threshold. Companies do not pay the Medicare levy.

300

Under taxation law, how long must a business generally keep its records?
Five years

400

List three sections that should be included in a business plan.
Three of the following: aims, structure, marketing, industry analysis, financial plan, tax obligations.

400

How is income tax levied on the profit made by a sole trader?
The profit of a sole trader is treated as personal income for the owner and will be taxed at personal income tax rates.

400

Identify three pieces of information that will be included on a payment summary.
Three of the following: • gross payment • tax withheld (tax credits) • reportable fringe benefits amount • superannuation • other deductions such as union fees.

400

Above what level of sales revenue must a business register for GST?
A business must register for GST when the GST turnover is $75,000 or more ($150,000 or more for non-profit organisations) in any 12-month period.

400

Outline four records that a business may need to keep.
Four of the following: • tax invoices • cash books • wages books • stock records • banking records • motor vehicle log books • diaries • ledgers • cash register tapes • receipts • journals • depreciation schedules.

500

What might happen if a business does not have an ABN?
If you do not have an ABN, other businesses may be required to withhold 46.5% from any payments they make to you.

500

What is an essential difference in ownership structure between a sole trader business and a company?
A sole trader business has no separate legal entity from its owner, whereas a company has a separate legal identity from that of its shareholders.

500

List two things a business must do when it ceases trading or has been sold.
Firstly, meet all lodgment, reporting and payment obligations it has with government agencies. Cancel any registrations that will no longer be required. This may include the ABN.

500

Can a company claim the 50% discount on the capital gains tax paid on the profit from the sale of a CGT asset?
No. The 50% discount generally only applies to individuals and trusts (and the 33⅓% discount applies only to super funds).

500

List three things a business document must include for it to be acceptable as evidence for tax purposes.
Three of the following: • date document was prepared • date of purchase • name and ABN of supplier or service provider • details of what was purchased • cost of purchase including GST.