Business Accounting Services in Eastwood
How Much Tax Should My Business Pay?
The amount of tax a business in Australia must pay depends on various factors, including business structure, taxable income, eligible deductions, and any applicable concessions.
For the 2024-25 financial year, the company tax rate is 30%. However, small businesses classified as base rate entities qualify for a reduced rate of 25%.
Types of Business Taxes in Australia
Income Tax
Businesses pay tax on profits, with the rate varying depending on whether the entity is a sole trader, partnership, trust, or company.
Goods and Services Tax (GST)
Businesses with an annual turnover of $75,000 or more must register for GST, which applies at a 10% rate on most goods and services.
Pay As You Go (PAYG) Withholding
If your business employs staff, you may be required to withhold tax from employee wages and remit it to the ATO.
Fringe Benefits Tax (FBT)
Businesses providing non-cash benefits to employees (e.g., company cars, subsidised loans) may need to pay FBT.
Capital Gains Tax (CGT)
If your business sells an asset at a profit, it may be subject to capital gains tax (CGT).
Stamp Duty
Certain business transactions and property purchases may incur stamp duty, which varies by state.
Staying compliant with tax obligations is crucial. Consulting a tax professional can ensure your business meets all ATO requirements while optimising tax outcomes.
How to Lodge a Business Tax Return
Identify Your Business Structure
Company
A company lodges a business tax return and pays tax on company income.
Partnership
Each member of a partnership pays individual taxes on their share of partnership earnings. The partnership itself doesn’t pay business taxes, but you still need to lodge a business return under the partnership’s tax file number to declare the partnership’s income, deductible expenses and distribution of net income or loss between partners.
Non-Profit Organisations
Some non-profit organizations may be required to complete a BAS if they are registered for GST or have other tax obligations.
Trust
A trust must lodge an annual tax return; however, the tax payable is determined by how the trust’s income is distributed. If all trust income goes to adult resident beneficiaries, only these individuals pay tax, based on their trust earnings and other income declared in their personal tax returns.
Review Your Business Activity Statement (BAS)
The ATO automatically sends BAS to any business that has registered for an Australian business number (ABN) and goods and services tax (GST). For most small businesses BAS is lodged quarterly.
The lodgement requires the reporting of the amounts of GST owed, taxes on your business profit (PAYG instalments), and the taxes owed by employees (PAYG withholding) as well as other taxes. You’ll later use this information when you lodge your company tax return.
Therefore, it’s important to review it for accuracy before filing. You can later correct BAS mistakes or make adjustments, as necessary.
Organise Business Records
You may need these business records to lodge your taxes:
Receipts for business expenses
Records of asset sales for CGT purposes
Employee payroll and superannuation records
Business income statements
Financial statements and bank transactions
The ATO requires businesses to retain records for at least five years. Implementing a strong record-keeping system simplifies compliance.
Claim Tax Deductions
A tax deduction is an eligible business expense that reduces taxable income. Examples include:
Operating expenses (utilities, office supplies, rent)
Depreciating assets (equipment, machinery)
Employee wages and superannuation contributions
Marketing and advertising costs
Keeping accurate records is key to maximising deductions and ensuring compliance.
Report Employee Tax & Super Contributions
Using payroll software streamlines compliance by automating tax calculations, PAYG withholding, and super contributions.
Lodge Before the Deadline
Ensure your business tax return is filed on time. If you need more time, a benefit of working with a registered tax agent is you can get lodgement extensions. However, any tax owed must still be paid by the original due date unless an alternative arrangement is made with the ATO.
How Business Tax Deductions Work
Businesses can claim deductions on expenses incurred during operations. However, deductions must be directly linked to generating assessable income.
Key financial components to understand:
Assets – Business-owned resources like cash, equipment, and property.
Liabilities – Business debts and financial obligations.
Equity – The owner's financial interest in the business after deducting liabilities.
Deductions are subject to ATO regulations and may vary based on the nature of the expense. Fines and penalties are generally non-deductible.
Frequently Asked Questions
What is business tax?
Business tax includes various levies such as income tax, GST, payroll tax, and other obligations depending on the business structure and activities.
What types of taxes do Australian businesses pay?
✔ Income Tax
✔ GST
✔ PAYG Withholding
✔ FBT
✔ CGT
✔ Stamp Duty
How can a business minimise its tax liability?
Businesses can legally reduce their tax liability by claiming deductions, using tax offsets, deferring income, and utilising ATO concessions.
What is the company tax rate in Australia?
✔ 30% for standard companies
✔ 25% for small businesses (base rate entities)
What are tax deductions, and how do they work?
A tax deduction reduces taxable income by allowing businesses to claim expenses related to their operations. The deduction doesn’t directly reduce your tax, but it reduces your taxable income. Eg If you income is $100, a $10 deduction will reduce your taxable income to $90. You don’t pay $10 less tax.
Get in touch with us
Whether you have questions about our services or are ready to take control of your finances, we’re here to help. At Robert Kim and Co, we pride ourselves on providing personalized support and expert guidance to meet your accounting needs.
Contact us today to schedule a consultation or ask any questions you may have about business tax, bookkeeping, property investment. Our team is ready to assist you with clear, straightforward advice to help you achieve your financial goals.
(02) 9874 2366
Suite 2, 14 Ethel St, Eastwood NSW 2122
Send us a message
Get in touch with us
Whether you have questions about our services or are ready to take control of your finances, we’re here to help. At Robert Kim and Co, we pride ourselves on providing personalized support and expert guidance to meet your accounting needs.
Contact us today to schedule a consultation or ask any questions you may have about business tax, bookkeeping and property investment. Our team is ready to assist you with clear, straightforward advice to help you achieve your financial goals.
(02) 9874 2366
Suite 2, 14 Ethel St, Eastwood NSW 2122
Property tax and SMSF specialist | Business accounting, bookkeeping & payroll | Bilingual Korean-English services | Tax planning for families & businesses | Serving clients in Sydney & across Australia for 30+ years
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(02) 9874 2366
Suite 2, 14 Ethel St, Eastwood NSW 2122
Monday - Friday, 9:00 am - 6:00 pm