What Is The Company Tax Return And Lodging Process?

A company tax return is a monetary information filed by many companies with HMRC every year to report their earrings, loans, loss, and gains. Companies use this information to calculate the corporation tax they are in debt. 

The completed tax return of a company includes:

• Accounts of the company
• Tax computations of the company
• A CT600 form
• An additional documentation 

A company has to complete a company tax return if a ‘Notice to Deliver a Company Tax return’ is issued by the HMRC. This happens when a company’s accounting year ends, and the deadline for completing a company tax return is ten months before the accounting period ends. 

Who Is Required To File A Company Tax Return? 

A few companies need to submit a company tax return after notice is left from the HMRC. Some companies may not need to submit tax returns if HMRC considers them dormant for corporate tax. Limited liability partnerships (LLPs) usually do not need to file a tax return for a company but need to do so if-

• They are not conducting business for make profit
• In withdrawal
• Terminated by court orders

Lone traders and partners in various partnerships do not need to submit a company tax return but report their earnings to HMRC by analysing themselves. 

Step-By-Step Guide To The Lodging Process For Various Businesses 

Sole traders 

When running a small business by themselves, they are a sole trader. In this structure, the sole trader and his business are all by themselves, and they do not pay separate taxes for the business. An ABN is also not needed by a sole trader. 

Each year before 31 October, personal income tax needs to be lodged to the ATO, and it can be done online with the help of the myTax tool.  

Partnerships 

When more than two people run a business together, it is called a partnership. A separate ABN is needed for such a business, and being a part of the business, one needs to pay a partnership tax. The tax would be the business’s net income, except for all the expenses and deductions. In addition, each business partner needs to lodge their tax with the help of myTax Portal.  

Trusts

A trust is a safety net for the people who wish to protect their assets for beneficiaries. The one who owns the trust becomes the trustor, and those managing the trust become the trustee. All individuals involved in the trust need to lodge their tax returns. There are three types of trusts such as-.

• Trust tax: Several trusts are based on the needs of an individual, but all the trusts need to pay a yearly trust tax. The trustee manages this process. 
• Beneficiaries: A trust can have all the assets that generate income, such as real estate, stocks, and investments. Each of the beneficiaries named in the trust has to lodge income details in their tax returns. 
• Trustee: A trustee takes care of the trust and any tax associated with it. They need to include the income that has been earned from the tax returns. 

Companies

Whether big, small, public or private, they need to pay a yearly company tax. The amount of Company tax Australia to be paid depends on the income and tax rates set by the government. In addition, all the board members and shareholders need to declare their share of their income in their tax returns. 

One might need to lodge other specified taxes. Like when a company’s annual income is more than $75,000, one needs to register for the Goods and Services Tax. If a business owner works in a certain industry, they need to lodge other niche taxes like the Luxury car tax or Wine equalization tax. 

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Ways To Lodge Tax Returns

There are three ways to lodge a tax return-

• Personal tax

The myTax tool needs to be used for lodging the tax return. A myTax tool is an online tool powered by the ATO and managed through the myGov account. When a tax is lodged for the first time, one needs to sign up for a MyGov account and link it with the ATO. This tool is made for individuals, whether a sole proprietor or a business partner. 

A tool is created by the ATO that helps track the income and expenses of a business. The tool can also be used to record invoices, deductions, receipts or fees for the year.

• Business tax 

Online software needs to be used for lodging taxes on behalf of a business such as a company or trust that complies with standard business reporting. SBR is a list of rules that are being made for business taxes. 

Several cloud-based software providers in Australia built a module compliant with SBR in their systems. This way, one can directly log in to complete their tax returns. When using on-premise tools to communicate with the ATO, one needs to create a machine credential, and this can be done by using RAM or Relationship Authorisation Manager.  

• Tax agents 

Whether the tax return is for a single person or a business, one can hire a certified tax agent to help you. The agent can be authorized to act on one’s behalf; they do not cross-check the documentation’s legitimacy, so factual details need to be provided. 

Tax agents also assess the financial statements, educate about ATO and then lodge returns. 

Tax practitioners belong to a special program that allows them to lodge their clients’ tax returns after the deadline of 31 October. The tax agent needs to be contacted in advance to ensure they have the required time to manage the return. A company has to complete a company tax return if a ‘Notice to Deliver a Company Tax return’ is issued by the HMRC. This happens when a company’s accounting year ends, and the deadline for completing a company tax return is ten months before the accounting period ends. 

Conclusion

Lodging taxes should not be a tough process. If one has multiple sources of income, the best way to lodge a tax return is to contact a Tax agent in Perth. They will guide you throughout the process of lodging tax returns.