Small Business Tax & Compliance FAQs
Understanding your tax and compliance obligations is essential for running a successful small business in Australia. From BAS lodgement to superannuation, there are several requirements the ATO expects you to meet. Below we answer the most common questions our clients ask about staying compliant.
How much tax does a small business pay in Australia?
The amount of tax your small business pays depends on your business structure. Sole traders pay individual income tax rates ranging from 0% to 45% plus the Medicare levy of 2%, based on their taxable income. Companies with aggregated turnover under $50 million pay a reduced rate of 25%. Partnerships and trusts distribute income to individuals who then pay at their marginal rates. Your actual tax liability also depends on allowable deductions, offsets, and any concessions you qualify for. At BVM, we help small business owners across Sydney structure their affairs to manage their tax position effectively.
What is the company tax rate for small businesses in Australia in 2025?
For the 2025-26 financial year, the company tax rate for base rate entities is 25%. To qualify, your company must have an aggregated turnover of less than $50 million and no more than 80% of assessable income can be base rate entity passive income. If your company does not meet these criteria, the standard rate of 30% applies. This reduced rate has been in place since the 2021-22 year and represents a significant saving for eligible businesses. Our CPA qualified team at BVM helps companies across South West Sydney confirm their eligibility and plan accordingly.
What is the difference between a BAS and a tax return?
A Business Activity Statement (BAS) is a periodic report you lodge with the ATO to report and pay GST, PAYG withholding, and PAYG instalments. It is typically lodged monthly or quarterly. A tax return is an annual lodgement that reports your total income, deductions, and calculates your final tax liability for the financial year. Your BAS handles ongoing obligations throughout the year, while your tax return reconciles everything at year end. Both are mandatory if you are registered for GST or have PAYG obligations. At BVM, we help clients manage both lodgements to ensure nothing is missed.
How often do I need to lodge a BAS?
Most small businesses lodge their BAS quarterly, with due dates on 28 October, 28 February, 28 April, and 28 June. If your GST turnover is $20 million or more, you must lodge monthly. Some businesses voluntarily choose monthly lodgement for better cash flow management. If you use a registered tax agent like BVM, you may receive extended lodgement due dates. The ATO expects on-time lodgement regardless of whether you can pay the full amount owing. Our team in Oran Park helps clients set up systems to make BAS preparation straightforward and stress-free.
What happens if I lodge my BAS late?
If you lodge your BAS after the due date, the ATO may impose a Failure to Lodge (FTL) penalty. The penalty is calculated at one penalty unit for each 28-day period the lodgement is overdue, up to a maximum of five penalty units. As of 2025-26, one penalty unit is $313 for individuals and $1,565 for companies. The ATO may also charge General Interest Charge (GIC) on any unpaid amounts from the original due date. Repeated late lodgement can also flag your account for further ATO scrutiny. At BVM, we ensure our clients never face unnecessary penalties through proactive deadline management.
What are the ATO penalties for late lodgement?
The ATO applies Failure to Lodge (FTL) penalties based on entity size. For small entities, the penalty is one penalty unit ($313 in 2025-26) for each 28-day period the document is overdue, capped at five units ($1,565). Medium entities face double this amount, and large entities face five times the base rate. The ATO issues a formal notice before applying penalties, giving you 21 days to lodge. If you have a reasonable excuse or the failure was due to circumstances beyond your control, you can request remission. Our CPA qualified team handles penalty remission requests for businesses across Sydney regularly.
Do I need to register for GST if my turnover is under $75,000?
If your annual GST turnover is under $75,000 ($150,000 for non-profit organisations), GST registration is optional. However, there are situations where voluntary registration makes sense. If your business expenses include significant GST, registering allows you to claim input tax credits. If you supply to other GST-registered businesses, they may prefer dealing with registered suppliers. Once registered, you must stay registered for at least 12 months and lodge BAS returns. If you are a taxi or rideshare driver, registration is mandatory regardless of turnover. At BVM, we advise clients on whether voluntary registration benefits their specific situation.
What is Single Touch Payroll and do I need it?
Single Touch Payroll (STP) is a reporting system that requires employers to send payroll information to the ATO each time they pay employees. This includes salaries, wages, PAYG withholding, and superannuation. Since 1 July 2021, all employers must use STP Phase 2, regardless of how many employees they have. This includes businesses with just one employee. You need STP-enabled payroll software or you can use the ATO free solution for micro employers (one to four employees). STP replaces the need to provide payment summaries to employees at year end. Our team helps South West Sydney businesses set up compliant payroll systems efficiently.
What superannuation obligations do I have as an employer?
As an employer, you must pay superannuation guarantee (SG) contributions for all eligible employees. This applies to employees who are 18 or older, or under 18 and working more than 30 hours per week. There is no minimum earnings threshold. You must pay SG at least quarterly, by the 28th day after the end of each quarter. Contributions must go to a compliant super fund chosen by the employee or their nominated stapled fund. Failure to pay on time results in the Super Guarantee Charge, which includes the shortfall, interest of 10%, and an administration fee. At BVM, we help employers stay on top of their super obligations year-round.
What is the super guarantee rate in 2025?
The superannuation guarantee rate for the 2025-26 financial year is 12% of an employee's ordinary time earnings. This rate is legislated to increase to 12% from 1 July 2025, where it will remain. Ordinary time earnings include base salary, commissions, shift loadings, and allowances, but generally exclude overtime payments. The maximum super contribution base for 2025-26 is $62,500 per quarter, meaning you do not need to pay SG on earnings above this amount. Our CPA qualified team at BVM ensures businesses across Sydney calculate and pay the correct super amounts each quarter.
Need Help With This?
If you have questions specific to your situation, our team can provide tailored advice. We work with over 100 small businesses across Sydney and hold a 5.0 Google rating.
This information is general in nature. It does not constitute professional advice tailored to your specific circumstances. Tax laws change frequently and individual situations vary. We recommend consulting with a qualified accountant before making financial decisions based on this information. BVM Accountants & Business Consultants, Oran Park NSW 2570.