Your Company Tax Estimate is calculated using your:
Income: Any transactions that you’ve categorised as business income
Tax Deductible Expenses: Any transactions that you’ve flagged as tax deductible
As you categorise income and flag expenses as tax deductible, your Company Tax Estimate will change in real time on the Dashboard screen of your Parpera App.
We calculate your Company Tax Estimate using the following formula:
Company Tax Estimate = 25% Base Rate Entity Tax Rate x (Income - Tax Deductible Expenses)
Wondering how this works? Here’s an example real-world scenario
If let's say, you haven’t categorised any transactions as business income and/or as Tax Deductible Expenses, your Company Tax Estimate will be $0.
If you then categorise a $1,000 (ex. GST) transaction as business income, your Company Tax Estimate will become $250.
If you then tag a $100 (ex. GST) transaction as tax deductible, your Company Tax Estimate will become $225.
This follows the formula above, where:
$225 = 25% x ($1,000 - $100)
Please note that the Company Tax Estimate should be used as an estimate only and is based on several assumptions and inputs, including:
Your company is a base rate entity and eligible to use the 25% tax rate, as defined by the ATO. If your company is not a base rate entity, it will be subject to tax at a rate of 30%
Your company organisation type doesn’t fall under the classification of Life insurance, Retirement savings accounts (RSAs) providers, Pooled development funds, Credit unions, Not-for-profits
The income and deductions flagged by you within the Parpera App
The income and deductions used in the calculation are exclusive of GST flagged by you in the Parpera App
Transactions you flag as tax deductible are assumed to be in fact tax deductible as defined by the ATO
Transactions you flag as tax deductible do not involve a purchase of an asset that must be depreciated over multiple tax periods
Your business accounts for taxable income on a cash basis, not an accrual basis
The Company Tax Estimate is limited as it does NOT consider:
Relevant business transactions that may take place outside of the Parpera App
Other sources of taxable income not recorded in the Parpera App
Concessions to tax payable on capital gains or losses including any cost base applicable to any asset sale
Instalments paid towards your company tax liability via the PAYG instalment system
Any accrual income or expense which apply to your taxable income, for example, depreciation, revaluation of assets and bad debts
Any taxable income or deductions not recorded in the Parpera App
Any other form of withholding tax or tax credits such as franking credits
The tax implications of indirect income such as trust distributions or company dividends
Other complex company tax issues, for example, carry forward tax losses, fringe benefit tax, personal services income, tax incentives and offsets
For more information on taxes, we recommend you speak with a registered tax agent or visit the ATO website.