DJ Grigg - Blog Post Business Taxes

Business Taxes 101

Understanding the Basics: Business Taxes

When running a business, it’s essential to understand the different types of taxes that apply. Depending on your business structure, you may be required to pay a variety of taxes. The most common taxes include:

  • Goods and Services Tax (GST)
  • Income Tax
  • Pay As You Go (PAYG) Withholding for employees
  • Payroll Tax
  • Excise Tax

In addition to these, your business might also encounter:

  • Fringe Benefits Tax (FBT)
  • Capital Gains Tax (CGT)
  • Property Taxes
  • Vehicle Taxes
  • State and Local Government Duties and Levies

Taxes Paid on the Business Activity Statement (BAS)

Once your business is registered for applicable taxes, you’ll report and pay many of them through your monthly or quarterly Business Activity Statement (BAS). Key taxes paid via BAS include:

  • GST: Your business collects GST from customers and pays it to suppliers, then pays the difference between the GST on sales and purchases.
  • PAYG Withholding: This applies to payments made to employees or suppliers who do not provide an Australian Business Number (ABN).
  • PAYG Instalments: Contribute towards your expected income tax bill.

Other taxes that may be included on the BAS (if applicable) are:

  • Fringe Benefits Tax (FBT) instalments
  • Fuel Tax Credits
  • Wine Equalisation Tax (WET)
  • Luxury Car Tax

State Revenue Office Taxes and Fees

Some business taxes are paid directly to your State Revenue Office. These can include:

  • Land Tax for property purchases
  • Payroll Tax (once your reportable wages exceed the state threshold)
  • Stamp Duty on property transfers

Income Tax for Businesses

At the end of the financial year, your business calculates income tax, factoring in any PAYG instalments already paid. By claiming tax deductions for business expenses, you can reduce your taxable income and lower your tax bill.

If your business makes a financial gain from disposing of assets, such as property or shares, you’ll pay Capital Gains Tax (CGT). This tax is part of your overall income tax. Income tax rates and calculations vary depending on your business structure, such as a sole trader, partnership, company, or trust.

Small Business Tax Concessions

If you’re a small business, you may qualify for tax concessions that reduce your tax liability. These concessions can apply to:

  • Asset write-offs
  • Primary producers
  • Fringe benefits
  • Start-up expenses

Additionally, there are Capital Gains Tax (CGT) concessions available to small businesses that can further reduce the tax payable.

Thinking of Starting or Changing a Business?

Before starting or making changes to your business, it’s crucial to plan for the taxes you’ll need to manage. Speak with a tax agent about adding or cancelling tax registrations, claiming concessions, and staying compliant with tax laws.

For more on our ‘Understanding the Basics’ series, see: