The Ultimate Guide to Business Taxes in Australia: What You Need to Know
Running a business in Australia comes with exciting opportunities - but also responsibilities. Especially when it comes to taxes.
Understanding your tax obligations is crucial to:
Keep your business compliant
Avoid costly mistakes
And even save money
Whether you’re a small business owner, a startup founder, or managing a family business, here’s everything you need to know about business taxes in Australia.
1. There are different types of business taxes in Australia
If you run a business in Australia, you might be required to pay several types of taxes depending on their structure, turnover, and activities including:
Income Tax: All businesses must pay tax on their profits. Companies pay 25% or 30% depending on turnover, while sole traders and individual partners report profits on their personal tax returns.
Goods and Services Tax (GST): If your business has a turnover of $75,000 or more a year, you will likely need to register for GST and charge 10% on most goods and services. This applies to sole-traders too. If you register for GST, should charge this 10% on top of what you normally charge to customers and set this money aside for your Business Activity Statement (BAS) payments throughout the year.
Payroll Tax: Payroll tax is an indirect, state-based tax that applies if your total taxable wages exceeds the relevant threshold in your state or territory.
Fringe Benefits Tax (FBT): FBT refers to non-cash benefits that employers provide to employees. Like company cars or entertainment perks. This is separate from income tax. Employers must lodge an FBT return annually.
Superannuation: While not a tax per se, paying the correct super contributions for your employees is a legal obligation. As of July 1 2025, employers must pay a minimum of 12% superannuation into their employee’s super fund of choice.
2. Choose the right structure for your business
Your business structure impacts how you pay taxes - so it’s important that you select the correct structure to build upon. Here are 4 common business structures you can set up:
Sole Trader: Simple to set up, profits taxed at your personal rate.
Partnership: Profits shared among partners and taxed personally.
Company: Separate legal entity, taxed at company rates.
Trust: Can offer tax planning flexibility, but more complex to manage.
Choosing the right business structure affects your tax obligations, liability, and eligibility for deductions. If you’re not sure about which structure to go ahead with, find a trusted accountant or Virtual CFO to make the best decision.
3. Key Tax Obligations You Can’t Ignore
Register for an ABN: Every business needs an Australian Business Number to operate legally.
Lodge BAS (Business Activity Statements): If registered for GST, you’ll need to submit BAS monthly or quarterly to report GST, PAYG withholding, and other obligations.
PAYG (Pay As You Go) Instalments: Helps manage income tax throughout the year, avoiding big bills at tax time.
Record Keeping: Maintain accurate financial records for at least five years. This ensures compliance and makes tax time much easier.
4. Common Tax Deductions for Businesses
Claiming the right deductions reduces your taxable income and saves money. Some common deductions include:
Office rent, utilities, and equipment
Business-related travel and meals
Employee salaries and contractor payments
Marketing and advertising costs
Software subscriptions and tools
Always ensure deductions are legitimate and properly documented—this protects you if the ATO audits your business.
5. Planning for Tax Efficiency
Strategic planning can help reduce tax liabilities legally:
Timing Expenses: Plan purchases and payments around financial year-end to maximize deductions.
Super Contributions: Consider making additional contributions to reduce taxable income.
Depreciation Strategies: Claim depreciation on assets like equipment or vehicles to lower taxable profits.
6. When to Seek Professional Help
Taxes can be complex, especially for growing businesses. An experienced accountant can help you:
Navigate tax obligations efficiently
Implement tax-saving strategies
Forecast cash flow for tax payments
Avoid penalties and compliance issues
Even small businesses benefit from professional guidance—saving money and reducing stress in the long run.
Final Thoughts
Understanding business taxes in Australia is essential for keeping your business healthy, compliant, and profitable. By knowing your obligations, claiming the right deductions, and planning strategically, you can make tax time much less stressful.
Remember, the right support from accountants, advisors, or Virtual CFOs, can turn tax management from a headache into a powerful tool for business growth.
