In short: The main business taxes in Australia are GST, company or personal income tax, payroll tax (a state tax), capital gains tax, fringe benefits tax, PAYG withholding for staff and PAYG instalments. Which ones apply depends on your structure, turnover and whether you employ people. Setting tax money aside in a separate account is the simplest way to avoid a nasty bill.

Unlike income tax which is relatively straightforward for employees, tax for businesses is a much more complicated world to navigate. As a small business owner in Australia, you must ensure these tax obligations are met.

Whilst you should always hire an accountant to help with your business finances, it’s still essential to understand and plan for the different taxes that will affect your business.

This article will give you a comprehensive guide to business tax in Australia, including eight significant types of tax that will affect your small businesses.

An overview of business taxes in Australia

The Australian Tax Office (ATO) administers and collects most business taxes, with state governments in charge of a few exceptions.

If a business fails to meet its tax obligations, it may face significant penalties from the ATO.

Without proper tax planning practices and strategies, small businesses risk facing nasty tax bills that can severely disrupt cash flow. This is why we recommend that all businesses sweep revenue aside into a separate tax account throughout the year. Whether you pay your tax monthly, quarterly, or annually, a separate tax account will ensure you have the funds to cover your next tax bill.

What are the types of business taxes that I should know about?

Goods and Services Tax (GST)

GST is a broad-based tax of 10% on most goods and services sold or used in Australia.

Businesses with an annual turnover greater than $75,000 ($150,000 for non-profit organisations) are required to register and include GST as part of their Business Activity Statements. The cost of GST is typically included in the price of a good or service, with businesses collecting this cost on behalf of the ATO.

However, businesses can claim back GST through credits. Any expense associated with the running of your business can be claimed as a GST credit as long as:

• You intend to use your purchase solely or partly for your business

• The purchase price includes GST

• You provide or are liable to provide payment for the item you purchased

• You have a tax invoice from your supplier

Due to substantial GST costs that can be claimed back, it’s critical to keep track of your expenses and understand the rules surrounding GST. Your accountant will be able to help through this process.

Company tax

Australian companies are subject to a company tax on their profits sourced in Australia.

For companies that qualify as a ‘base rate entity’, the company tax rate is 25%. However, all other companies are subject to a company tax rate of 30%.

To qualify as a base rate entity, your company needs to meet the following criteria:

• Have an aggregated turnover of less than $50 million

• Have less than 80% of its earnings coming through passive income sources (i.e., rent, capital gains)

Businesses not under a company structure are not considered separate legal entities, and your earnings will instead be taxed under your income tax rate.

Income Tax

Everyone is subject to income tax. However, your income level and business structure will dictate what income tax rate you must pay.

As explained above, if you operate as a company, your income will be taxed under the appropriate company tax rate. However, for other business structures (such as a sole trader or distributional trust), your income is instead subject to personal income tax.

Keep an accurate record of all the expenses you use to operate your business, as these may be eligible to be deducted from your taxable income. You can find out what items are tax deductible on this page of the ATO website.

Resident personal income tax rates for 2026–27 are:

• $0 to $18,200: nil

• $18,201 to $45,000: 15%

• $45,001 to $135,000: $4,020 plus 30% of income over $45,000

• $135,001 to $190,000: $31,020 plus 37% of income over $135,000

• Over $190,000: $51,370 plus 45% of income over $190,000

The Medicare levy (generally 2%) is added on top. You can estimate your tax with our income tax calculator.

Payroll Tax

Payroll tax is a government tax on the wages an employer pays their employees.

In 2026–27 the Victorian payroll tax rate is 4.85% (1.2125% for eligible regional employers). Employers only pay once their Australian wages go over the tax-free threshold of $1 million a year ($83,333 a month). The threshold phases out for employers with wages between $3 million and $5 million, and extra mental health and COVID debt levies apply to very large employers. Each state and territory sets its own rates and thresholds.

You can find out more about payroll tax here.

Capital Gains Tax (CGT)

Capital Gains Tax is a federal tax on any capital gains a business makes from selling a non-inventory asset.

‘Capital gains’ refers to the profit a business makes if an asset is sold for a greater value than it was bought. This commonly applies to the sale of assets such as property, real estate, bonds, stocks, and precious metals.

In this case, businesses must report their capital gains and losses on their income tax returns, where the capital gains are included as part of their taxable income. Businesses are required to record the purchase of any asset that may be subject to CGT in the future, including assets bought anywhere in the world.

Companies do not get a CGT discount. Individuals, trusts and partnerships get a 50% discount on assets held for more than 12 months for gains made up to 30 June 2027. From 1 July 2027 that discount is replaced by cost base indexation with a minimum 30% tax on the gain. Small businesses may also be able to use the small business CGT concessions.

To avoid getting caught out by CGT costs at tax time, set aside funds as soon as you sell an asset at a gain.

Fringe Benefits Tax

Fringe Benefits Tax (FBT) is a tax paid by employers on certain benefits or incentives they provide for employees outside their salary or wages. This can include items such as a company car, memberships, discounted loans or a salary sacrifice arrangement.

FBT is separate from income tax and calculated on a fringe benefit's value.

Employers may be able to claim an income tax deduction for the cost of a fringe benefit and GST credits for the cost of the item. Check out the ATO website for more information.

PAYG Withholding

Pay As You Go (PAYG) Withholding is not a tax on businesses but instead income tax that a business pays on behalf of the employees. To help workers avoid facing a hefty bill every tax time, employers are required to withhold their employee’s income tax and instead pay this directly to the ATO. This tax is paid through your Business Activity Statements.

PAYG Withholding may also apply for payments made to contractors and external businesses that haven’t quoted your ABN to you.

Please note that businesses must register for PAYG Withholding before making a payment that is subject to withholding.

PAYG Instalments

If your latest tax return showed business or investment income of $4,000 or more (and tax payable of $1,000 or more), the ATO will usually put you into the Pay As You Go instalment system. PAYG Instalments is a program designed to spread your tax liability across the financial year and mitigate your risk of being caught by a large tax bill at tax time.

After lodging a tax return that exceeds the threshold, the ATO will place you in the PAYG Instalment system. This will break up the tax you expect to pay into instalments, which are included in your Business Activity Statements on a quarterly or annual basis.

Even if you make PAYG Instalments, you will still be required to lodge an annual income tax return. For more information regarding PAYG Instalments, visit this page from the Business Australia website.

Get an accountant to help with your business taxes

Navigating your tax obligations can be one of the most stressful and complicated parts of being a business owner. This is why choosing the right business tax accountant can be one of the most important decisions you make.

An experienced accountant will take care of these obligations for you and identify and implement tax planning strategies that can effectively minimise your next tax bill.

If you have questions about your business tax, talk to our business accountants.

Frequently asked questions

What taxes does a small business pay in Australia?

Most pay income tax (company or personal, depending on structure) and, once turnover reaches $75,000, GST. Employers also deal with PAYG withholding, super and possibly payroll tax and FBT. CGT applies when you sell assets at a gain.

What is the company tax rate in Australia?

25% for base rate entities (aggregated turnover under $50 million and no more than 80% passive income) and 30% for other companies.

When do I need to pay payroll tax in Victoria?

When your Australian wages go over $1 million a year ($83,333 a month) in 2026–27. You must register with the State Revenue Office within seven days of the end of the month in which you go over the threshold.

Last updated: 25 October 2026.

General information only, based on the rules at the date above. It does not take into account your circumstances, so speak to your accountant before acting.