Taxation portfolio Assignment Example | Topics and Well Written Essays - 5000 words

Taxation portfolio - Assignment ExampleIt is due to this understanding that students without business background often get intimidated whenever they embark of tax income incomeation as a job to study. Nonetheless, it is important to understand taxation concepts and how they impact on businesses as they prep be to enter paid practice. globalization has forced political relations to acknowledge the significance of small businesses in the present competitive markets. In this regard, governments have hypothecate regulations to implement numerous taxes with a view of maximizing revenue collection. Globally, small and medium enterprises are know for their contribution to economic growth, entrepreneurship and employment creation. Basically, small businesses are known universally as engines for economic growth. This piece of music focuses on the tax aspects of a small-scale wine business in Australia and also tax implications of idiosyncratic employees. Taxation consequences This is because they stimulate economic growth and therefore, play a critical role in riches creation. In Australia, small and medium enterprises account for 37% of economic production and employ roughly 3.7 zillion people. Nevertheless, similar to other small and medium enterprises across the globe, respectfulness with government regulations heavily impacts on their operations. This is because SMEs bear significant costs of compliance cost relative to their size. According to Hasseldine and Anold, government regulations, in particular, tax compliances are a major issue for SMEs (370). For instance, following intense political debate, the Australian government introduced good and services tax (GST) which was one of the significant tax reform policies. This was an outrage on the economic impact of GST to SMEs starting with start-up taxation costs. Compliance costs as defined by Kumar, are those costs incurred by businesses in meeting the requirements in order to comply with a given tax s tructure besides payment of tax itself (35). Such costs include legal and other professional fees, acquisition costs among others. GST compliance costs popularly known as commencement costs are usually incurred by the business in preparation to comply with GST legislation. According to National Audit Office, SMEs forms the large component of the informal sector and are known to evade tax (44). Pope and Fernandez discover that complex tax registration, and high tax rates are the main contributing factors to problems experienced by SMEs in the Australian tax system (15). Value-Added Tax Act provides that Australian economy cannot fence effectively with other world economies when SMEs continues operating in an informal sector (9). In this vein, it is therefore, paramount to abase the informal sector by putting in place a simplified tax system. Australian government acknowledges the significance of SMEs to the economy and has been providing support to entities falling under this group by way of trim tax and tax compliance burden. In addition, the government has also simplified reporting requirements and record keeping. For instance, in 2006 budget, the Australian government passed to reduce taxes on SMEs by AUS$ 435 million over the following four years. As such, SMEs continued to receive more assistance by aligning thresholds, streamlining definitions and reducing tax complexity and compliance costs. SMEs are required by law to maintain record of their sales, which includes income earned excluding GST. Tax compliance and organisation