Published: 2013-12-18 17:05:15 Author: Source: Ocean Daily Views: comment:

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In the last issue, I introduced you to the employee benefits tax and the Christmas party considerations. In this issue, we will talk about franchise operations and tax related matters.

Franchise operation: it is a wide range of business operation mode, generally refers to Party A, in the form of contract, provide Party B with paid use of its name, trademark, know-how, products and operation management experience, so that Party B can engage in business activities . Among them, Party A is the franchise headquarters, and Party B is the franchisee.

1. Join the headquarters

As a franchise headquarters, you need to pay attention to the following:

(1) Australian Business Number (ABN): As a franchise headquarters, you need to apply for ABN and register for GST or other business tax registrations, such as: employees withholding and paying payroll tax PAYG Withholding, Fuel Tax Credit, etc.. ABN is the enterprise Between the company and the Australian Taxation Office (ATO) and other government departments and agencies.

(2) Income tax:

Usually, for income tax, the franchise fee (deducting the GST part) collected by the franchisee from the franchisee is the taxable income of the franchise headquarters.

2. Franchisee

As a franchisee, you need to pay attention to the following:

(1) Australian Business Number (ABN):

First of all, as a franchisee, you also need to apply for an ABN.

(2) Franchise fee

The initial fee or transfer fee paid to the franchise headquarters is part of the franchisee’s asset nature cost. Since these expenses are invested in the enterprise as capital, this part of the expenses cannot be deducted as operating expenses in the annual income tax calculation.

(3) Copyright usage fee and interest

Usually, the franchise agreement will specify, including copyright usage fees, interest payments or other fees. These payments generally include administrative management, advertising and technical support.

(4) Training fees

Under normal circumstances, the training expenses paid by the franchisee to the franchise headquarters can be deducted as operating expenses. However, at the initial stage of operation, if the training expenses are regarded as the cost of assets of the enterprise, therefore, this part of the expenses cannot be deducted from the operating income.

(5) Goods and Services Tax (GST)

Generally speaking, if the franchise headquarters has registered GST, then the money paid by the franchisee to the franchise headquarters will also include GST. At the same time, if the franchisee has registered for GST, you can claim back the GST part from the tax bureau when you pay the initial franchise right use fee, renew the franchise right, franchise service fee, advertising fee, transfer fee and training fee, etc. .

(6) Transfer or terminate the right to join

Whether you are transferring the right to join or terminate the right to join, you need to consider both the capital gains tax (CGT) and the goods and services tax (GST).

For more exciting information, please pay attention to the next issue. If you have other questions about franchise operations and taxation, please contact our Li Min Accounting Firm!

TEL: (03) 9533 8980.

E-mail: [Email protected]

Address: Suite 2&3, 321 Chapel St Prahran

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In the last issue, I introduced you to the employee benefits tax and the Christmas party considerations. In this issue, we will talk about franchise operations and tax related matters.

Franchise operation: it is a wide range of business operation mode, generally refers to Party A, in the form of contract, provide Party B with paid use of its name, trademark, know-how, products and operation management experience, so that Party B can engage in business activities . Among them, Party A is the franchise headquarters, and Party B is the franchisee.

1. Join the headquarters

As a franchise headquarters, you need to pay attention to the following:

(1) Australian Business Number (ABN): As a franchise headquarters, you need to apply for ABN and register for GST or other business tax registrations, such as: employees withholding and paying payroll tax PAYG Withholding, Fuel Tax Credit, etc.. ABN is the enterprise Between the company and the Australian Taxation Office (ATO) and other government departments and agencies.

(2) Income tax:

Usually, for income tax, the franchise fee (deducting the GST part) collected by the franchisee from the franchisee is the taxable income of the franchise headquarters.

2. Franchisee

As a franchisee, you need to pay attention to the following:

(1) Australian Business Number (ABN):

First of all, as a franchisee, you also need to apply for an ABN.

(2) Franchise fee

The initial fee or transfer fee paid to the franchise headquarters is part of the franchisee’s asset nature cost. Since these expenses are invested in the enterprise as capital, this part of the expenses cannot be deducted as operating expenses in the annual income tax calculation.

(3) Copyright usage fee and interest

Usually, the franchise agreement will specify, including copyright usage fees, interest payments or other fees. These payments generally include administrative management, advertising and technical support.

(4) Training fees

Under normal circumstances, the training expenses paid by the franchisee to the franchise headquarters can be deducted as operating expenses. However, at the initial stage of operation, if the training expenses are regarded as the cost of assets of the enterprise, therefore, this part of the expenses cannot be deducted from the operating income.

(5) Goods and Services Tax (GST)

Generally speaking, if the franchise headquarters has registered GST, then the money paid by the franchisee to the franchise headquarters will also include GST. At the same time, if the franchisee has registered for GST, you can claim back the GST part from the tax bureau when you pay the initial franchise right use fee, renew the franchise right, franchise service fee, advertising fee, transfer fee and training fee, etc. .

(6) Transfer or terminate the right to join

Whether you are transferring the right to join or terminate the right to join, you need to consider both the capital gains tax (CGT) and the goods and services tax (GST).

For more exciting information, please pay attention to the next issue. If you have other questions about franchise operations and taxation, please contact our Li Min Accounting Firm!

TEL: (03) 9533 8980.

E-mail: [Email protected]

Address: Suite 2&3, 321 Chapel St Prahran