How much tax should my business pay?
How Much Tax Should My Business Pay?
The amount of tax your business needs to pay in Australia depends on several factors—your business structure, annual income, allowable deductions, and available tax concessions.
For the 2024–25 financial year:
Standard company tax rate: 30%
Base rate entities (small businesses): 25%
Understanding your obligations and how to optimise your tax position starts with knowing what types of taxes your business might face.
Types of Business Taxes in Australia
Here are the main taxes businesses in Eastwood—and across Australia—may need to pay:
Income Tax
Paid on profits. The rate and method of payment depend on your business structure:
Sole traders and partnerships: taxed at individual rates
Companies: taxed at the corporate rate
Trusts: income is distributed and taxed in the hands of beneficiaries
Goods and Services Tax (GST)
Required for businesses with $75,000+ in annual turnover
Charged at 10% on most goods and services
PAYG Withholding
If you employ staff, you must withhold tax from their wages and send it to the ATO.
Fringe Benefits Tax (FBT)
Applies when offering employees perks such as company cars or subsidised loans.
Capital Gains Tax (CGT)
Triggered when selling business assets for a profit.
Stamp Duty
Charged on certain transactions and property purchases; rates vary by state.
How to Lodge a Business Tax Return
Know Your Business Structure
Your structure affects how tax is calculated and lodged:
Company: Pays tax on its income and lodges its own tax return.
Partnership: Each partner pays tax individually; the partnership still lodges a return for reporting purposes.
Trust: Lodges an annual return, but income is usually taxed in the hands of beneficiaries.
Non-profit: May need to lodge a BAS if registered for GST or has tax obligations.
Review Your BAS (Business Activity Statement)
If you're registered for GST or PAYG, you'll receive a BAS—usually quarterly. It includes:
GST collected and paid
PAYG instalments
PAYG withholding for employees
Other relevant taxes
Always check for errors before submitting, and update if needed later.
Keep Accurate Business Records
Good record-keeping helps ensure compliance and simplifies tax time. Make sure to keep:
Receipts for expenses
Asset sale documentation
Employee payroll and super records
Business income and bank statements
The ATO requires most records to be kept for at least 5 years.
Claim All Eligible Tax Deductions
Reduce your taxable income by claiming:
Operating costs: rent, electricity, internet, supplies
Employee wages and superannuation
Advertising and marketing
Depreciating assets like equipment or vehicles
Deductions must be directly related to earning income and properly documented.
Report Employee Tax and Superannuation
Using payroll software helps automate and stay compliant with:
PAYG withholding
Super guarantee contributions
Employee payslips and reporting obligations
Lodge On Time
Meeting ATO deadlines is essential to avoid penalties. Registered tax agents can often get extended lodgement dates, but payments are still due on the original due date unless other arrangements are made.
Understanding Business Tax Deductions
To claim deductions, the expense must be tied to earning business income. Here's how deductions relate to your financial structure:
Assets – Resources the business owns (e.g. equipment, vehicles)
Liabilities – Outstanding debts (e.g. loans, credit)
Equity – The owner’s financial interest after liabilities
Deductions can reduce taxable income, but not everything is claimable. For example, ATO fines and penalties are not deductible.
Need Help with Your Business Tax in Eastwood?
Navigating business tax can be complex—but you don’t have to do it alone. Our Eastwood-based accountants can help you:
Maximise deductions legally
Stay compliant with ATO requirements
Lodge on time, every time
Book a consultation today to get personalised tax guidance for your business.
