Understanding Your Business Tax Obligations

ABN and Business Registration

An Australian Business Number (ABN) is your business's unique identifier. You need one if you're carrying on a business in Australia. Without an ABN, other businesses may withhold 47% from payments to you. Registering is free through the Australian Business Register (ABR).

Income Tax

All businesses must pay income tax on their profits. How it works depends on your structure:

• Sole traders: Business income is reported on your personal tax return and taxed at individual rates
• Partnerships: The partnership lodges a return showing how income is distributed; each partner pays tax on their share
• Companies: Pay a flat company tax rate (25% for base rate entities with turnover under $50 million)
• Trusts: Income is distributed to beneficiaries who pay tax at their individual rates

GST (Goods and Services Tax)

You must register for GST if your business turnover is $75,000 or more per year ($150,000 for non-profits). Once registered, you charge 10% GST on most goods and services, claim GST credits on business purchases, and lodge a BAS (monthly or quarterly) to report your GST position.

PAYG Withholding

If you have employees, you must withhold tax from their wages and send it to the ATO. You report this on your BAS. You also need to provide payment summaries (or income statements via Single Touch Payroll) to employees by 14 July each year.

PAYG Instalments

If your business earns above a certain threshold, the ATO may require you to make quarterly PAYG instalments — essentially prepaying your expected income tax throughout the year. This prevents a large tax bill at year-end.

Superannuation Guarantee

If you have employees, you must pay super at the current Superannuation Guarantee (SG) rate on their ordinary time earnings. Super must be paid at least quarterly to a compliant super fund. Late payments attract the Super Guarantee Charge (SGC), which includes penalties and interest.