Lodging Your Tax Return: Episode Three – Share Schemes

At ATB, we are passionate about and believe in small and medium business in Australia.

As chartered accountants and business mentors, we’ve been providing financial solutions and advice to businesses throughout Australia and around the world for more than 20 years.

We’ve made it our mission to help you navigate the curious and chaotic world of business – offering expertise in small business management, virtual CFO services, wealth planning, cloud software setup and support, and full-service tax accounting.

Let us help you through the tax maze, the cashflow nightmare, gross margins, profit margin, superannuation, debtors… and more.

In this episode ‘Share Schemes’, ATB Director Jim Vass explains how employee share schemes work, and how they might affect your taxable income.

Jim also discusses business schedules and business activity statements with regard to lodging an income tax return for your business.

What is a Share Scheme?

Employee share schemes provide benefits to an employee in the form of discounted shares, or an option to purchase shares in the future.

It’s important to understand whether the share scheme you belong is eligible for special tax treatment prior to lodging your own income tax return.

The documentation provided to you by your employer should help you determine what, if any, aspect of your share scheme is taxable.

Share schemes can be complex, so it’s strongly recommended that you seek professional advice to find out the full tax implications of your situation.

Understanding Business Schedules and Business Activity Statements

If your income tax return includes a business schedule, it means you have previously reported information to the Australian Taxation Office (ATO).

A business schedule is typically associated with a business activity statement or BAS. The income you report in your tax return must match what is recorded in your BAS.

Businesses registered for GST are required to complete and submit a regular BAS. Even if you’re not registered for GST but are carrying on a business all income and expenses need to be reported in your business schedule.

It’s important that you’re aware what documentation you need to complete and that all of your income is included before you can claim a tax deduction.

What can you claim?

The ATO allows you to claim expenses (or deductions) in your annual tax return. Expenses that are directly related to earning your income are considered to be ‘business-related’.

Understanding what you can claim as an expense is determined by the industry your business operates in.

Any expenses you declare in your tax return should correlate with your industry’s benchmarks. A member of the ATB can help you identify what those benchmarks are.

Let ATB help you

Share schemes can be complex to understand and report on a tax return.

If you’re unsure of the tax implications for your share scheme, a member of the ATB team will be able to provide you with a definite explanation.

As a small business owner, a business schedule may be included on your tax return. Therefore, it’s important the information you input on the schedule matches the data from your BAS.

ATB offers complete tax accounting services, including advice on how to manage your own business finances and reporting.

Even if you plan on submitting your own income tax return, ATB is available to provide support and advice.

Coming up Next – Episode 4 – Capital Gains Tax

In the next episode, Jim explains what capital gains tax is, what types of investments attract capital gains tax, and how this tax is calculated.