Wondering how much tax you should be paying? Here’s the short version: small businesses in Australia pay company tax at 25% or 30%, or marginal rates if you’re a sole trader or use a trust. On top of that, factor in GST, PAYG withholding for employees, super, and — if your payroll is high enough — state payroll tax and FBT.
But the real picture is more complex.
As a Director at VLL Partners, I work with business owners across healthcare, professional services, childcare, manufacturing, and hospitality. I’m often asked how tax impacts growth, hiring, and cash flow. Below, I’ll break down the most common questions and clarify what small businesses should expect to pay.
Here’s what you’ll learn:
If you’re reviewing your structure, planning for year-end, or just want to know your tax settings are on track, you’re in the right place.
There’s no single small business tax rate. Instead, business owners face a mix of taxes, including:
What you pay — and when — comes down to your structure, turnover, and wages.
If you’re a “base rate entity,” your company pays 25% tax on taxable profits (up to $50m turnover, with mostly business income). Other companies pay 30%.
Taxable profit is calculated after allowable expenses, rather than what’s in your bank account.
If your company uses a tax agent, your tax return is usually due by 28 February of the following income year. If you lodge it yourself, the deadline is typically 31 October.
Your actual due date may change based on your company’s situation, lodgement history, or if the ATO has put you on a different lodgement cycle. Also, tax is often payable before the return is due, so waiting until the last minute can put pressure on your cash flow.
This is why business owners benefit from planning ahead of year-end. By doing so, tax liabilities can be forecast, funded, and managed in advance rather than handled at the last minute.
You need to register for GST when your annual turnover hits $75,000, or if you expect to reach the threshold. You’ll collect 10% on sales for the ATO, then offset it with the GST you pay on business purchases.
GST reporting is done through your Business Activity Statement (BAS), which can also include other obligations such as PAYG withholding and instalments.
Most small businesses lodge BAS quarterly to keep cash flow steady. Annual BAS is possible in some cases, but you’ll need tight records all year.
PAYG withholding is what you hold back from employee or director salaries and send to the ATO.
PAYG instalments are prepayments of business or investment tax, usually paid quarterly, to help you avoid a big year-end bill.
The Superannuation Guarantee rate is 12% of ordinary time earnings for all eligible employees (including many working directors). Late or underpaid super is risky: it can become non-deductible and trigger director penalties. With Payday Super fast approaching, you’ll soon need to pay super in line with pay cycles, not quarterly. You’ll need to manage cash flow accordingly to ensure your business complies.
For example:
A North Sydney hospitality group with 30 staff on $60,000 each would budget over $216,000 a year for compulsory super. If they miss a payment, they risk ATO scrutiny and losing the team’s trust.
Payroll tax kicks in once your total wages cross the state threshold (grouped across entities if needed). For 2025–26, NSW businesses pay 5.45% on total Australian wages above $1.2 million. If you operate in more than one state, you’ll need to apportion wages and may have to register in several places. Getting this wrong can trigger an audit.
FBT applies when your business provides non-cash benefits — including cars, meals, or even gym memberships — to staff or directors. Employers pay FBT based on the grossed-up value of those perks.
Many FBT concessions and exemptions exist, but documentation is everything. Missed records or incorrect calculations are a red flag for ATO review.
Yes, your business structure directly affects your tax rate. Here’s how it works:
If your active company turns over less than $50 million, you’ll pay 25% tax (the “base rate entity” rate). Bigger or more passive companies pay 30%. When you take profits out as salary or dividends, you and any co-owners pay personal tax, offset by franking credits.
A trust usually doesn’t pay tax if it distributes all income to beneficiaries. Beneficiaries pay tax at their own marginal rates, or at the top rate if the trust doesn’t distribute correctly. Trusts can help with income-splitting, but you need to keep good records.
For example:
A North Sydney healthcare operator running through a family trust might distribute profit to adult family members, reducing their collective tax rate. However, if the trust fails to distribute properly before year-end, income could be taxed at 45% — the top marginal rate.
If you’re starting out, your profits may be quite low. But once you register for GST or hire staff, you’ll need to manage BAS, PAYG, and super. As your business grows, expect more complexity with PAYG instalments, FBT, and payroll tax as your wage bill rises.
Common errors to avoid include:
Just because your business is losing money doesn’t mean you’ve failed — it just means there’s room for a smarter approach. Get accounting tips and insights to help you turn things around for good.
To save more on tax, check your eligibility for these concessions.
Claim $20,000 per eligible asset if you time your purchases strategically.
Capital Gains Tax (CGT) concessions can mean significant tax savings on business sales or restructures. Eligibility is complex, but the benefits are significant.
An income tax offset is available to some non-company businesses, capped annually.
Proactive tax planning isn’t just about compliance; it’s about protecting what you’ve built and setting up for growth. That’s why you should consider small business accounting services and business tax planning services that deliver year-round, not just at tax time.
With that in mind, here are some key times tax planning is essential:
Your tax bill depends on your structure, profit, wages, and where you operate. For most established owners, the main drivers are company or trust tax, GST, PAYG, super, and state payroll tax.
The challenge for small business owners is knowing what you owe, what’s changing, and how to manage risk so you keep more cash in your pocket.
VLL Partners has spent decades helping Sydney business owners simplify decisions and stay ahead. For proactive, personal tax planning, book a consultation with me today.
