10. how company tax works

What is company tax

Company tax is income tax paid by the company on the profit the business earns

What is the base rate entity tax for a company

25%

formula for calculating taxable profits

taxable profits = revenue- deductible expenses

Formula for calculating company tax

Company tax = taxable profit x 25%

What are the four ways of paying yourself

Wages/director fees

Expense reimbursement

Dividends

Director loan

What is wages/directors fees

Personal taxable income

PAYG withholding and super may apply

What is expense reimbursement

Repayment for a business expense you personally paid

What is dividends

Payment to shareholders from the company after-tax profit

What is a director loan

Money owed between you and the company that must be correctly recorded

How often does a company lodge a tax return?

It is done Annually and is seperate from an BAS report

Give an example of company tax

Revenue = $100,000

Deductible expense = $60,000

100,000 - 60,000 =40,000

Taxable profit = $40,000

$40,000 × 25% = $10,000

company tax = $10,000

After tax profit $30,000