Running a small business in Australia comes with a range of tax obligations. Understanding what taxes apply to your business and planning for them early can help avoid cash flow stress, penalties and last minute surprises. With the right budgeting and advice, staying on top of tax does not need to feel overwhelming.
Income Tax
All small businesses must pay income tax on their taxable profit. The rate you pay depends on your business structure.
- Sole traders pay tax at individual marginal tax rates
- Partnerships do not pay tax themselves, but each partner pays tax on their share of the profit
- Companies that qualify as base rate entities pay a company tax rate of 25% for the 2025 to 26 financial year. Companies that do not qualify, such as larger companies or those earning more than 80% of their income from passive sources, pay a company tax rate of 30%.
- Trusts distribute income to beneficiaries, who then pay tax at their own rates
Budgeting tip: set aside a percentage of each payment you receive into a separate tax savings account. This helps ensure funds are available when tax bills fall due.
Goods and Services Tax GST
If your business has a turnover of $75,000 or more per year, you must register for GST. Once registered, you need to:
- Charge 10 percent GST on taxable sales
- Pay GST on purchases
- Lodge Business Activity Statements BAS either monthly or quarterly
You can usually claim GST credits for the GST you pay on business expenses.
Budgeting tip: treat GST as money you collect on behalf of the ATO, not as income. Keeping GST separate helps prevent accidental overspending.
Pay As You Go PAYG Withholding
If you employ staff or pay directors fees, you must withhold PAYG tax from wages and payments. These amounts must be reported and paid to the ATO through your BAS.
This includes withholding for:
- Employees
- Company directors
- Contractors where a voluntary agreement applies
- Or, where no valid ABN is recorded
Budgeting tip: use payroll software that automatically calculates PAYG amounts and aligns with Single Touch Payroll reporting.
Superannuation Guarantee
Employers must pay superannuation for eligible employees at a rate of 12% of ordinary time earnings for the 2025 to 26 financial year.
Super must be paid at least quarterly and on time. Late payments can result in penalties and loss of tax deductions.
Budgeting tip: include super payments in your regular payroll budgeting rather than treating them as a separate expense.
Fringe Benefits Tax FBT
If you provide non cash benefits to employees, such as company cars, entertainment or certain reimbursements, you may be liable for Fringe Benefits Tax.
FBT is separate from income tax and runs on its own year from 1 April to 31 March.
Budgeting tip: review benefits regularly with your accountant to understand the true cost and whether exemptions or concessions apply.
Payroll Tax
Payroll tax is a state based tax and applies if your total wages exceed the state threshold. In Queensland, payroll tax may apply once wages exceed the current threshold set by the state government.
Budgeting tip: monitor total wages closely if your business is growing so you are not caught off guard by payroll tax obligations.
Capital Gains Tax CGT
Capital Gains Tax applies when you sell or dispose of business assets such as property, equipment or goodwill. CGT is part of your income tax, not a separate tax.
Small business CGT concessions may reduce or eliminate the tax payable if eligibility criteria are met.
Budgeting tip: seek advice before selling major assets so you understand the tax impact and can plan accordingly.
How to Stay Ahead of Your Tax Obligations
Good tax planning is about preparation, not panic. To stay ahead:
- Keep accurate and up to date records year round
- Set aside tax regularly rather than waiting for bills
- Lodge BAS and returns on time
- Review your structure as your business grows
- Work with a registered tax agent who understands small business
Get Support from Hervey Bay Tax Solutions
Tax rules can change, and every business is different. Hervey Bay Tax Solutions works with local small businesses to help them understand their obligations, manage cash flow and plan confidently for the year ahead.
If you want help budgeting for tax, reviewing your structure or staying compliant, reach out to the team for tailored advice and support.