Understanding income tax is essential for your business. On this page you will learn how to manage income tax for your business and employees, and how to get help.
The amount of income tax your business has to pay, depends on your taxable income. It’s calculated from your assessable income less any deductions.
You must lodge an income tax return for any year you run your business. You need to lodge even when you don’t expect you’ll owe tax.
When your business and investment income reaches a certain amount, you’ll pay your income tax in instalments. These payments are usually quarterly. This helps you to avoid a large tax bill after you lodge your tax return.
If you’re a small business with an annual turnover of less than $10 million, you may be able to get small business tax concessions from the ATO.
The ATO website has information on the tax concessions, offsets and rebates available for small business.
The full company tax rate is 30% and the lower company tax rate is 25%. Your business is eligible for the lower rate if it’s a base rate entity.
Your company is a base rate entity if:
The lower company tax rate and eligibility requirements have changed in recent years. Check out the ATO website to learn more about the changes to company tax rates.
As an employer, you need to collect pay as you go (PAYG) withholding amounts from payments you make to:
It's important to calculate the right amount of tax to withhold from your employees' pay. There are handy tables to help you pay:
There are also tables to work out the correct amount to withhold for:
Enter an earnings amount into the relevant ATO tax table. It’ll then tell you the amount of tax to withhold.
Alternatively, use the tax withheld calculator to work out how much tax to withhold from payments to your employees or other payees.
A year usually consists of 26 fortnightly pay periods or 52 weekly payments. However, in some years there is an extra pay period. Due to the extra pay, you may find that not enough money has been withheld at the end of the financial year.
In these years, it's a good idea to give your employees the option of withholding additional pay as you go (PAYG) withholding amounts from their pay to avoid a possible debt.
As a small business owner, you're often dealing with administrative work like taxation outside of business hours. Get help with a range of tax issues from the ATO at a time that suits you.
Small Business Assist provides online guidance and tax information. For a more personalised and secure experience, use the call-back service.