There are a multitude of good and reasonable reasons why it’s possible. You can’t make companies pay tax on revenue because that would instantly throw 90% of companies into bankruptcy.
I see people say this all the time but it makes no sense. I pay taxes on revenue and so do you. We don’t get to deduct all our expenses from our salaries right?
How come every single person in the country isn’t bankrupt if paying taxes on revenue leads to bankruptcy?
You can’t stop companies from paying licensing fees etc to their parent company and writing it off as a business cost, because that would destroy all franchise stores etc.
Yea so?
The tax “loopholes” exist for a legitimate reason, so companies structure themselves so they can take advantage of them. Getting rid of them would hurt the companies that need them more than the companies that “abuse” them.
I disagree. Companies exist in countries where these types of things are not permitted.
I see people say this all the time but it makes no sense. I pay taxes on revenue and so do you. We don’t get to deduct all our expenses from our salaries right?
Personal Income tax is not the same as taxes that businesses pay. You can make tax deductions too, and you can do salary sacrificing and many other things to reduce your income tax as well.
If you made companies pay tax on revenue, pretty much every company in the entire world would close instantly.
Yea so?
So you think franchises shouldn’t exist?
Companies exist in countries where these types of things are not permitted.
Example please? Which companies in which countries are doing tax things that aren’t permitted?
Personal Income tax is not the same as taxes that businesses pay.
I know. That’s what I said. We pay taxes on revenue and business pay taxes on profits. They get to deduct all their expenses and we don’t.
You can make tax deductions too, and you can do salary sacrificing and many other things to reduce your income tax as well.
I can make some deductions but I can’t deduct all my expenses like a business does. If I was to deduct all my expenses like a business does I would indeed reduce my income taxes drastically.
If you made companies pay tax on revenue, pretty much every company in the entire world would close instantly.
Again if this is true why isn’t every person in the world bankrupt because they pay taxes on revenue?
So you think franchises shouldn’t exist?
Wouldn’t bother me at all.
Example please? Which companies in which countries are doing tax things that aren’t permitted?
I don’t understand why you decided to be so dishonest all of a sudden. Why did you go to “doing tax things”. When did I say there were countries where businesses didn’t “do tax things”?
Businesses only get to deduct business related expenses
What other kinds of expenses does a business have?
the same way you and I get to deduct income-earning related expenses.
like what? I can’t deduct my costs associated with traveling to work. I can’t deduct my clothing I buy for work. I can’t deduct my lunch at work. I can’t deduct my laptop case or anything like that.
I incur tons of expenses for my work. I can’t deduct any of it.
You can deduct your laptop case, at least you can in Australia.
Businesses and individuals have different tax laws for good reasons. If businesses had to pay tax as an individual then there would be maybe 10 businesses left in the world. I was going to say that I’m sure you can see how that would be bad, but I’m not sure.
You can deduct your laptop case, at least you can in Australia.
Really? Do you have any citation for this? If I bought a laptop case so I could put my work laptop in it I could deduct it from my income?
Businesses and individuals have different tax laws for good reasons.
So you say. I disagree.
If businesses had to pay tax as an individual then there would be maybe 10 businesses left in the world.
Again you keep repeating this as if it was some law of nature or something. If that’s true then by logical inference there would be only 10 people left in the world who were not bankrupt. How come normal humans can pay tax on revenue and not go bankrupt but a business would?
I was going to say that I’m sure you can see how that would be bad, but I’m not sure.
I just don’t believe your outrageous and unsubstantiated assertion.
To claim a deduction for a bag, case or satchel you must:
incur the cost and use the bag or case to carry items for work
need to carry the items for work and the bag or case must be suitable for that purpose
You might want to go see an accountant asap and get them to add some deductions for the last few years ;). You can do that btw - adjust previous years tax returns after they’ve been filed so you can get some money back.
How come normal humans can pay tax on revenue
Revenue != income, first and foremost. Revenue is total earnings from sales of services and products by a business. Income/profit is what a business is left with after expenses (and other things we don’t need to get into) are deducted.
Just think about this super simple example:
You start a business selling PCs that you build out of your home.
In your first week you only buy inventory (case, cpu, mobo, ram, gpu, ssd, etc) to make the pcs when you get an order.
You offer only a single sku for $2000
You get 4 orders and take $8000 in revenue.
You buy the parts to make these 4 PCs, parts list: $75 case, $250 cpu, $100 SSD, $200 RAM, $200 motherboard, $175 PSU, $750 GPU, $50 cables etc. Total per PC: $1800. 4 PCs = $7200. It costs $50 to ship each order, customers pay you for it = $200.
Total costs for first week: $7200 (PC parts) + $200 (shipping) = $7400
Total revenue for first week: $8000 (PCs) + $200 (Shipping) = $8200
Congratulations, you made $800 “profit” in your first week! Seems like a nice little business!
Now let’s work out your taxes using the current business tax laws. Let’s say the business tax rate is 25%.
Deduct your business costs from your revenue to get your profit, then pay tax on the profit: ($8200 - $7400) = $800.00 x 0.25 = $200.00 tax to pay.
Result: you made $600 profit in your pocket this week.
Now let’s work out your taxes using your proposed system of businesses paying tax on revenue.
Revenue of $8200 x 0.25 = $2,050.00 tax to pay.
Result: you owe the tax office $1250 after giving them your $800 that you made in “profit”. The business is unsustainable even though you have a healthy profit margin on all of your items.
Do you see why what you’re saying literally does not make sense?
Yes, really. How old are you btw? Do you have a full time job? Have you ever done a tax return?
I live in New Zealand. We don’t do tax returns here. Our taxes are automatically deducted from our salaries.
You might want to go see an accountant asap and get them to add some deductions for the last few years ;).
If I lived in Australia and if I had kept the receipts for every item I bought that I used at work and if the deductions of all those things would make a measurable impact on the taxes I paid I would do that.
Revenue != income, first and foremost. Revenue is total earnings from sales of services and products by a business. Income/profit is what a business is left with after expenses (and other things we don’t need to get into) are deducted.
Revenue is income. Income is not profit. Surely as an adult who has filed taxes you know this.
Do you see why what you’re saying literally does not make sense?
Ok then why can’t I deduct all my expenses for living and pay taxes only on the amount left? If a business gets to deduct the equipment they buy then I should be able to deduct all the food and clothes that I but. If a business gets to deduct their utilities I should be able to deduct my utilities. If a business gets to deduct the amount they pay employees and contractors I should be able to deduct any money I pay to tradies.
Why should I be punished for paying taxes on all my income while a business pays only a tiny percent of their income?
I see people say this all the time but it makes no sense. I pay taxes on revenue and so do you. We don’t get to deduct all our expenses from our salaries right?
How come every single person in the country isn’t bankrupt if paying taxes on revenue leads to bankruptcy?
Yea so?
I disagree. Companies exist in countries where these types of things are not permitted.
Personal Income tax is not the same as taxes that businesses pay. You can make tax deductions too, and you can do salary sacrificing and many other things to reduce your income tax as well.
If you made companies pay tax on revenue, pretty much every company in the entire world would close instantly.
So you think franchises shouldn’t exist?
Example please? Which companies in which countries are doing tax things that aren’t permitted?
I know. That’s what I said. We pay taxes on revenue and business pay taxes on profits. They get to deduct all their expenses and we don’t.
I can make some deductions but I can’t deduct all my expenses like a business does. If I was to deduct all my expenses like a business does I would indeed reduce my income taxes drastically.
Again if this is true why isn’t every person in the world bankrupt because they pay taxes on revenue?
Wouldn’t bother me at all.
I don’t understand why you decided to be so dishonest all of a sudden. Why did you go to “doing tax things”. When did I say there were countries where businesses didn’t “do tax things”?
Your income is not revenue.
Businesses only get to deduct business related expenses, the same way you and I get to deduct income-earning related expenses.
Why isn’t my income revenue?
What other kinds of expenses does a business have?
like what? I can’t deduct my costs associated with traveling to work. I can’t deduct my clothing I buy for work. I can’t deduct my lunch at work. I can’t deduct my laptop case or anything like that.
I incur tons of expenses for my work. I can’t deduct any of it.
Because definitions……
You can deduct your laptop case, at least you can in Australia.
Businesses and individuals have different tax laws for good reasons. If businesses had to pay tax as an individual then there would be maybe 10 businesses left in the world. I was going to say that I’m sure you can see how that would be bad, but I’m not sure.
Really? Do you have any citation for this? If I bought a laptop case so I could put my work laptop in it I could deduct it from my income?
So you say. I disagree.
Again you keep repeating this as if it was some law of nature or something. If that’s true then by logical inference there would be only 10 people left in the world who were not bankrupt. How come normal humans can pay tax on revenue and not go bankrupt but a business would?
I just don’t believe your outrageous and unsubstantiated assertion.
Yes, really. How old are you btw? Do you have a full time job? Have you ever done a tax return?
Really.
Sure do: https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/deductions-you-can-claim/work-related-deductions/tools-computers-and-items-you-use-for-work/bags-and-cases-for-work-items
You might want to go see an accountant asap and get them to add some deductions for the last few years ;). You can do that btw - adjust previous years tax returns after they’ve been filed so you can get some money back.
Revenue != income, first and foremost. Revenue is total earnings from sales of services and products by a business. Income/profit is what a business is left with after expenses (and other things we don’t need to get into) are deducted.
Just think about this super simple example:
You start a business selling PCs that you build out of your home.
Total costs for first week: $7200 (PC parts) + $200 (shipping) = $7400
Total revenue for first week: $8000 (PCs) + $200 (Shipping) = $8200
Congratulations, you made $800 “profit” in your first week! Seems like a nice little business!
Now let’s work out your taxes using the current business tax laws. Let’s say the business tax rate is 25%.
Deduct your business costs from your revenue to get your profit, then pay tax on the profit: ($8200 - $7400) = $800.00 x 0.25 = $200.00 tax to pay.
Result: you made $600 profit in your pocket this week.
Now let’s work out your taxes using your proposed system of businesses paying tax on revenue.
Revenue of $8200 x 0.25 = $2,050.00 tax to pay.
Result: you owe the tax office $1250 after giving them your $800 that you made in “profit”. The business is unsustainable even though you have a healthy profit margin on all of your items.
Do you see why what you’re saying literally does not make sense?
I live in New Zealand. We don’t do tax returns here. Our taxes are automatically deducted from our salaries.
If I lived in Australia and if I had kept the receipts for every item I bought that I used at work and if the deductions of all those things would make a measurable impact on the taxes I paid I would do that.
Revenue is income. Income is not profit. Surely as an adult who has filed taxes you know this.
Ok then why can’t I deduct all my expenses for living and pay taxes only on the amount left? If a business gets to deduct the equipment they buy then I should be able to deduct all the food and clothes that I but. If a business gets to deduct their utilities I should be able to deduct my utilities. If a business gets to deduct the amount they pay employees and contractors I should be able to deduct any money I pay to tradies.
Why should I be punished for paying taxes on all my income while a business pays only a tiny percent of their income?