Tax Basics
What is taxation?
Money collected by the government from individuals and businesses
What is government revenue?
Money earned through taxes and other sources.
What is a budget?
A plan for managing income and expenses.
What does GST stand for?
Goods and Services tax
What extra cost must a business pay when hiring staff that funds their retirement?
Superannuation
What are 5 things that taxes fund?
The Australian Taxation Office (ATO) collects theses taxes for the Australian Government to provide services, including:
Name three public service funded by tax.
- public schools
- public hospitals
- public transport
- public libraries
- Medicare
What is discretionary spending?
Non-essential spending with the funds available from one's disposable income.
Do businesses in Australia include GST in their prices? What is the exception?
Yes. Potential exceptions include:
- fruit and vegetables
- some Health Services
- some Educational facilities
What is the $20,000 Instant Asset Write-Off?
It allows eligible small businesses to:
Immediately deduct the full cost of an asset (like equipment, tools, or machinery)
If it costs less than $20,000 (excluding GST)
Instead of claiming depreciation over several years
What is the tax-free threshold in Australia for individuals?
$18,200
What is tax compliance?
Following tax laws and paying taxes on time.
How many legs does a spider have?
Eight
What do we call costs that reduce your taxable income?
Deductions
Paying wages can be considered both a variable or fixed payment. Why?
Wages are usually considered a variable cost because they change based on hours worked or business activity, but salaries are a fixed cost since they stay the same regardless of output. Whether wages are fixed or variable depends on how employees are paid.
What is progressive tax and what is it's purpose?
The more income you earn, the higher rate you are taxed. Australia's progressive tax system is designed to ensure that those who earn more contribute more accordingly. One of the biggest challenges is ensuring it stays fair over time.
Which type of tax funds most Australian public services?
Income tax
What is financial forecasting used for?
Predicting future income and expenses.
Can a business claim wages paid to employees as a deduction? Explain the pro/cons of your response.
A business can claim wages paid to employees as a tax deduction because it helps lower the amount of tax they have to pay. However, the business still needs to pay the wages in cash and follow the rules for taxes and super.
What must a business keep to prove deductions to the ATO?
Proof of purchase e.g. receipts and records
Is company tax in Australia a flat tax or a progressive rate? Why?
Flax tax. All businesses in the same category pay the same rate of tax on their profits, no matter how much profit they make.
What term describes how tax revenue is used to support those in need?
Redistribution
What does it mean to "live within your means"?
Spending less than or equal to your income.
What is the difference between gross and net income?
Gross income is the total money earned before any expenses or taxes, while net income is the money left after all expenses and taxes are paid.
What is PAYG?
PAYG stands for 'Pay As You Go'. It’s a system where employers withhold income tax from their employees’ wages and send it directly to the Australian Taxation Office (ATO) throughout the year.
This helps employees pay their tax gradually, rather than in one lump sum at the end of the financial year.