General Interest Charge: What is It and How Does It Work?

 

If you have an unpaid tax debt, the Australian Tax Office (ATO) will charge you interest on it. This is called the general interest charge (GIC). You may receive a general interest charge (GIC) for various reasons, including non-payment or late payment of taxes. Many of you may have a lot of questions when you receive a GIC. If you receive a GIC, you can also ask your personal tax return accountant in Melbourne. In today’s blog, we’ll discuss what exactly GIC is, how it works and much more about it.

What does General Interest Charge Mean?

The general interest charge is imposed by the ATO if you have unpaid tax debts. You may receive GIC either for non-payment or late payment of taxes. It may be surprising when you receive GIC and you may get confused when you receive it.

How does the General Interest Charge (GIC) Work?

The GIC was introduced in July 1999. The reason behind this was to simplify the complex system of interest and penalty notices that were earlier imposed for unpaid or late tax liabilities. A tax accountant in Melbourne knows everything about tax-related matters. Thus, you can seek help from them to know why the ATO charges interest on tax debts. The GIC will be charged if:

• An amount of tax, levy, charge or penalty is unpaid or paid late.

• The wrong tax amount is paid because of not accurate estimated income tax statement.

On most taxes, GIC is charged, including income tax, goods and services taxes, fringe benefits tax, and pay-as-you-go (PAYG).

Are You Allowed to Cancel Your General Interest Charge (GIC)?

If extenuating circumstances were the reasons for a delay in payment, then a remission application can be applied. A remission of GIC indicates the cancellation or reduction of the penalty. Generally, the ATO will consider situations that made you unable to pay your tax debts, such as natural disasters, sudden ill health or industrial action. If the ATO deems that it was your fault for unpaid or late payment of taxes, then they will consider whether the situation could have been overlooked or not. In some situations, the ATO may reduce payment or delay a payment plan if the payment would cause financial hardship.

If you are confused about whether a GIC has been charged accurately or you are struggling to make payment for tax, then it s advisable to seek help from a tax accountant in Melbourne.

How often is the general interest charge updated?

The ATO calculates the GIC rate quarterly. The ATO keeps on updating the taxpayers about new tax rules and regulations. The ATO publishes GIC rates around 2 weeks prior to the start of each quarter.

Is GIC a penalty?

The GIC is a penalty notice and it is charged by the ATO for unpaid or late payment of taxes. If you are receiving a GIC, then it is a serious matter, and you need to deal with it as soon as possible. The reason behind this is that interest will incur on the GIC debt daily until you make the full payment. Despite this, if you are facing issues because of inaccurate business records, then you can seek help from a bookkeeper for small businesses.

Have you been ever charged a GIC?

Have you ever received a general interest charge from the ATO? Expert tax accountants can help you with this matter. The tax accountant will help assess your tax affairs. If there is a need to submit a remission request, then accountants can help.

Conclusion

The blog is all about general interest charge, how it works, and whether you can apply for remission or not. If you are receiving GIC, then you can ask your tax accountant to look after this matter. For the year the GIC was incurred, you would be eligible to claim a deduction in your tax return. It comes under the category of the Cost of managing tax affairs. Tax accountants can help you avoid paying more than required by managing everything. Moreover, if you want to seek help managing tax-related matters, then you can also contact Melbourne Accounting Firm.

What Common Mistakes to Avoid When Filing Tax Returns?

It is important to lodge a tax return every year. However, not everyone is an expert in preparing and filing tax returns properly. Many people make mistakes when they file tax returns because they don't have enough knowledge about tax matters. For this reason, small business accountants in Melbourne are being hired by many companies. When small businesses make mistakes during tax season, they don’t know how to tackle those mistakes. Keep reading this blog to learn about tax return amendments and common mistakes that can be removed during tax season.

What are Tax Return Amendments?

A tax return amendment acts as a correction to tax returns that you previously filed. It is a chance for taxpayers to resolve mistakes in their tax returns to reflect correct changes in the tax returns. Another advantage of tax return amendments is that they may correct deductions and income. The ATO accepts tax return amendments within the specified time limits to allow taxpayers to adhere to tax laws. If you don’t know how to lodge or amend your tax return, you can seek help from tax accountants for small business in Melbourne.

Mistakes Small Business Owners Make When Filing Tax Returns

When you notice that you made a mistake while filing your tax return, you don’t need to panic. First of all, it is recommended to seek help from expert tax accountants because they know how to lodge tax returns without making any mistakes. Furthermore, if you tried to file a tax return on your own and made a mistake, you should ask for expert advice. Take a look at the following points to know what mistakes you should avoid when preparing and filing tax returns:

• Claiming Tax Deductions You are not eligible for

According to the ATO, tax deductions can be claimed by Australian citizens. No doubt that they go after taxpayers who don’t show their profit overseas to avoid paying taxes. You should also know that they also consider checking your accounts and financial transactions. Now, the ATO looks after every item that you claim for deductions. You will be targeted by the ATO if the deductions seem to be too high with no receipts for the same. A small business accountant can help you claim the rightful deductions.

• Not Paying Taxes on Time

You can manage your cash flow and reduce the stress of paying annual taxes by making prepayments. If you want to make prepayments, then you can do this at any time when you want. However, even if you are not paying tax returns on the specified date, then you have to pay a penalty along with your taxes. To avoid this, hire a tax accountant who will be responsible for paying taxes on time on your behalf.

• Not Keeping Financial Records

Even a small business has a fair amount to keep everything organised ahead of tax season. If you keep your documents organised throughout the year, then they can make the tax season smooth for you. An accountant can help you keep track of all financial activity throughout the year and simplify your yearly tax returns. To manage your business books, you can hire a Melbourne bookkeeper for your company. The following are important documents that you need to maintain:

• Credit card statements

• Sales receipts

• Expense invoices

• Bank statements

• Records of superannuation, wages, contracts of employees, and tax declarations

• A list of your debtors and creditors

• Not Seeking Help from a Tax Accountant

An expert tax agent knows alternative solutions for all types of tax problems. They know how to prepare and file tax returns on your behalf. They also know about possible tax deductions that your business can claim. If you want to hire an accountant near your area, you can also search for a small business accountant near me.

Conclusion

Tax time doesn’t need to be stressful. Your tax season can be smooth and stress-free if you have organised and accurate records that need to be used when filing tax returns. If you don’t know how to prepare and file tax returns, you should get help from an expert tax accountant. For more accounting solutions for your company, you can reach Reliable Melbourne Accountants.

Payroll Tax: What is It and Why is It Important to Pay?

If you are a business owner, you must know about payroll tax from the moment when you hire your first employee. It is for employers and based on the amount of the monthly wages paid to the temporary, permanent and casual employees and certain contractors. You can seek help from taxation accountants if you find difficulty understanding payroll taxes. To know more about payroll tax and its importance, keep reading this blog:

What is Payroll Tax?

Payroll taxes are considered financial obligations you and your employees are liable to pay. There are several types of payroll taxes – some are paid to the federal government and others are paid to the territory or state authorities. When it comes to the payroll tax, it is paid to the territory and state authorities on the money that employees earn. Being an employer, you need to calculate an estimate of those taxes and pay them to the government authorities on your employees’ behalf. If you don’t know how to calculate payroll tax, you can opt for taxation services where a tax accountant will help you.

What do You Need to Register for Payroll Tax?

If you are registering for payroll taxes, then you might have to submit a few details. Once you start entering details, they can’t be undone. Usually, you need:

• Australian Business Number (ABN)

• Contact, address, and bank details

• The date when you first employed staff

• All payments to employees for the existing/current year and the four previous years, including:

1. Fringe benefits

2. Wages and salaries

3. Termination payments

4. Allowances

5. Contractor payments

6. Director fees

7. Commissions and bounces

8. Shares and options

9. Employer superannuation contributions

You can hire Australian taxation accountants for your company so you can rely on them for payroll taxes. The detail that you need to provide while registering for payroll tax may differ from state to territory.

Why is It Important to Pay Payroll Tax?

When you think of payroll tax, it is important for the proper functioning of the tax system. State, territory and federal authorities depend on the employers to accurately calculate, evaluate, and submit taxes to ensure the tax system is operating properly. If you don’t have enough time to look after these types of taxes for your business, then it is advisable to seek help from taxation accounting services. Payroll tax finances the territory or state’s budget where the workers work. It also ensures that employees don’t need to pay a total sum of taxes at the end of the financial year.

Is There Any Difference Between Income Tax and Payroll Tax?

Yes, income tax and payroll tax both are different. The primary difference between income tax and the payroll tax is that payroll tax depends on the amount you pay your employees and contractors as wage. On the other hand, income tax depends on the business’s taxable earnings. When you or your taxation accountant in Melbourne calculate your payroll tax, then your company’s income is not considered.

Do You Need to Pay Taxes on Payroll?

As an employer, you are required to pay taxes on the payroll if your total payroll exceeds or meets a threshold that is usually determined by your territory and state authority. When the tax is collected and paid by the employer, it means the amount is coming from the employees’ wages. You can check whether you meet or exceed a threshold according to the limit set by your state or territory authority. Thus, it is important to understand the federal regulations and state or territory authority to know where you have a tax obligation. Despite this, you need to have accurate business books before you calculate to pay any tax. For this purpose, it is advisable to hire a Melbourne bookkeeper.

Conclusion

You need to have an extensive amount of knowledge to ensure the accuracy of payroll taxes. If you want to make sure that your company calculates and submits your payroll taxes on time and accurately, then it would be the best idea to hire a tax accountant for your company. If you are running a business, it is important for you to pay all types of taxes to which you are liable to avoid any type of penalty or fine. Moreover, you can also seek help from Reliable Melbourne Accountants for accounting solutions for your business. 

Benefits of Hiring a Registered Tax Accountant for Your Company

The Australian taxation system is dynamic and stringent. After some time, new tax laws and regulations are imposed. Taxpayers whether businesses or individuals must know about new tax laws to avoid penalties. Taxation accountants can help businesses and individuals struggling with tax preparation and lodgment of tax returns. The tax returns filing process will become easy and seamless for you with tax professionals offering their assistance throughout the taxation process. By hiring a tax accountant, you will get peace of mind. Rather than investing your valuable time in preparing and filing tax returns, it would be better to hire a professional tax accountant. In today’s blog, we’ll talk about the benefits you can get by hiring a registered tax professional for your business.

Why Should You Hire a Registered Tax Professional?

If you are not aware of tax rules, it might be difficult for you to prepare and file tax returns. And, the wrong lodgment of a tax return can lead to tax fines and penalties. To avoid tax penalties, you must seek help from someone who is an expert in managing and filing tax returns. For this purpose, you should look for accounting services for your company. For individuals or business owners, who are not tax accountants, tax is a complex task, which is why they prefer hiring a professional and registered tax accountant to get a possible refund. Here are some benefits that you can get by hiring tax accountants:

• On Time Tax Lodgment

Tax preparation and lodgment can be an overwhelming process for a beginner or one who is not an expert in managing taxes. The filing of tax returns can be delayed if there are many mistakes in the form. As a result, there will be a high chance of not lodging tax returns on time and accurately.

• Compliance with New Tax Laws

Almost every year, Australian tax rules and regulations change. With the new tax rules, it becomes challenging for businesses and individuals to lodge their taxes that may not be aware of new updates. However, it is important to comply with new tax laws to prepare and file tax returns. Otherwise, they may have to go through an audit or inspection. It can be a stressful situation for business owners. However, you can avoid hassles by reaching an accounting firm in Melbourne.

• Get Tax Planning Services

Before preparing and filing tax returns, tax planning must be done in the right way. Being inexperienced in tax planning, you should avoid it, and it would be best to ask your tax accountant to do it for you. As a result, you can better focus on your business activities and can make business strategies to grow your business. When you seek help from an accountant, then you will also get suggestions on managing taxation issues that come into your company.

• Money and Time Saver

For inexperienced individuals, the tax preparation and paying process can be difficult and time-consuming. Checking out all the financial transactions generated by bookkeepers in Melbourne and other related activities can take a lot of time in tax preparation. It would be better to seek help from a tax agent instead of managing everything on your own and struggling with the financial documents. Accountants and bookkeepers can save you money and time by helping you throughout the taxation process.

• Avoid Tax Penalties and Audits

The wrong submission of information or incorrect tax filing can lead to tax penalties and audits from the ATO. The ATO may release audit orders for suspected taxpayers. Your taxation process can be simplified if you hire a tax agent, and you can also avoid this stressful tax audit situation. Many business owners decide to prepare and file a tax return on their own to save money but end up paying tax fines when they submit wrong information while filing tax returns. Thus, it would be beneficial for you to hire a small business accountant in Melbourne to avoid tax penalties.

Conclusion

It is difficult for taxpayers to keep up with new tax laws, so they must hire registered tax accountants because they are experts in handling tax-related tasks. If you want to get the best accounting solutions for your company, you can contact Reliable Melbourne Accountants.