Tax Return

Discussion in 'Accounting & Tax' started by JZ93, 11th May, 2020.

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  1. JZ93

    JZ93 Well-Known Member

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    Hi wondering if someone can give me a rough answer. My accountant won’t do it without a $175 consultation fee..

    All I want to know is if I claim $800,000 of tax deductible expenses on 1,000,000 revenue. How much as a percentage of that will I get back on a tax return ROUGHLY. Doesn’t need to be exact just so I have an idea..

    The breakdown of revenue would be

    100k Income
    100k gst roughly
    800k marketing, software, contractors ect

    Would really appreciate it. Thank you
     
  2. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    What is your taxable income? looks like $100k so go to www.taxcalc.com.au and work out what tax you would pay on this.

    You don't get anything back, unless you have over paid tax.
     
  3. JZ93

    JZ93 Well-Known Member

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    Hi Terry

    Taxable paid would be 25k.

    So what happens with the 800k in tax deductible expenses?
     
    Last edited: 11th May, 2020
  4. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    I think you are misunderstanding something here.

    If your income is $25k and your make $100k from a business your new income is $125k and you pay tax on this.
     
  5. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Is this a company? I'm assuming so

    So you have
    $1m company turnover/revenue?
    $100k company profit? or is this $100k that you pay yourself as an employee?
    $100k company GST
    $800k company expenses

    Are you trying to work out how much the tax the company will pay? Are you PAYG - how much has the company paid in instalment so far?
     
  6. JZ93

    JZ93 Well-Known Member

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    @Terry_w Sorry I’ve edited that. Tax paid on the 100k is 25k.

    @Westminster yes correct. This is the end goal.

    I understand with the 100k I’d pay myself I’d get taxed about 25k.

    Juat wanting know if I’d be entitled to any return on the expenses.

    Thanks
     
  7. inertia

    inertia Well-Known Member

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    I think you are conflating 2 things - expenses of running a business, and personal income tax...?

    the ~$800k cost of doing business offsets against the $1m revenue.

    Income and income tax is unrelated to that (apart from the income you pay yourself also being a cost of doing business)

    Cheers,
    Inertia.
     
  8. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    I think you don't understand the basics. This is not how it works
     
  9. Westminster

    Westminster Tigress at Tiger Developments Business Member

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    Generally not.

    The return on expenses that you are getting is that they are a "loss" against the making of $1m. So instead of paying tax on $1m you get to say it cost $800k to make that $1m so I'm only going to pay tax on the difference. If the company profit is $100k then you pay company tax on that $100k.

    #notanaccountant so I've probably used the wrong words but hopefully that answers your question?
     
  10. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Plus Member

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    Think of it as being taxed on the profit and not the income.
     
  11. JZ93

    JZ93 Well-Known Member

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    Yeah think I’m getting the basics wrong. I’m comparing it to claiming expenses on a property.

    Makes sense thanks for the help!
     
    Terry_w likes this.
  12. Paul@PFI

    [email protected] Tax Accounting + SMSF Business Plus Member

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    The value of $175 of advice seems pretty good IMO.

    I bring it back to financial literacy. Many people leave school and dont understand basic concepts like income, expenses, profit, tax etc. I would spend 1/3rd of my time charging people to explain isssues they see as complex in simple and easy to understand terms to assist them to develop their own knowledge and understanding. I would guess 20% of taxpayers think that if if you spend $100 on something deductible that you will get a $100 refund. However there are many elements of the OP question that also pose a concern for someone operating a business. Without being personal I wanted to say this is too common.
    - Do they know what profit is, how to calculate it and how to maximise or change it ?
    I argue if they dont get how the tax formula works they should invest some time and money in speaking with their accountant about business development.

    One of the biggest falacies in accounting is that we do tax.... Nope. Tax is a consequence of profit. Focus should be given to increased revenue before focus is given to tax reduction. Rvenue is 100% where tax may be 30%. You can easily change revenue but tax is far harder and will need 3 times the effort for the same result which is unrealistic. You can spend your way out of profit and never get there to save tax. Hell you could give it away. But adding more income is gold. More income means more tax but thats actually a good thing. We can always address tax startegies but without profit the business will fail. A business making profits and paying tax should never go broke