Understanding how much tax a small business pays in Australia is critical for planning, budgeting, and avoiding unexpected costs. Whether you’re a sole trader, partnership, trust, or company, your tax obligations vary depending on your business structure, income, and eligibility for concessions.
In this blog, we’ll explore the current small business tax rates, what taxes businesses pay, how much tax business owners pay, and the common tax pitfalls to avoid in FY 2024–25. Plus, we’ll introduce how working with a tax expert like Accountants Direct can simplify the entire process.
What Taxes Does a Business Pay in Australia?
Every business in Australia must comply with a range of tax obligations depending on its structure and activity. Here’s what you might be responsible for:
- Income Tax – Paid on business profits
- Goods and Services Tax (GST) – If turnover exceeds $75,000/year
- Pay As You Go (PAYG) – Withheld tax from employees or instalments on income
- Fringe Benefits Tax (FBT) – If offering benefits to employees
- Payroll Tax – For businesses exceeding state-based thresholds
- Superannuation Contributions – For all eligible employees
Corporate Tax Rates Australia (2024–25)
For the financial year 2024–25, corporate tax rates in Australia are as follows:
| Business Type | Turnover Threshold | Corporate Tax Rate |
| Base Rate Entity | <$50 million and <80% passive income | 25% |
| Other Companies | >$50 million or passive income ≥80% | 30% |
A Base Rate Entity is defined as a company with an aggregated turnover of less than $50 million and deriving no more than 80% of its income from passive sources (e.g. rent, interest, dividends).
✅ Learn more about company registration and structure
How Much Tax Do Business Owners Pay?
For sole traders and partnerships, the business income is treated as the personal income of the owner or partners, and taxed at individual marginal tax rates:
| Taxable Income (2024–25) | Tax Rate |
| $0 – $18,200 | Nil |
| $18,201 – $45,000 | 19% |
| $45,001 – $120,000 | 32.5% |
| $120,001 – $180,000 | 37% |
| $180,001+ | 45% |
Trusts generally distribute income to beneficiaries, who are then taxed at their individual rates. Companies, as seen above, pay tax separately at a flat rate.
How Much Are Businesses Taxed in Australia?
Let’s break it down based on structure:
| Structure | How You’re Taxed | Typical Rate |
| Sole Trader | Personal Income Tax | 0–45% (marginal) |
| Partnership | Personal Income Tax (on each partner’s share) | 0–45% |
| Trust | Beneficiaries taxed at individual rates | 0–45% |
| Company | Corporate Tax | 25% or 30% |
Sole Trader Tip: Track All Deductions
Running a business solo? You may be eligible for a range of deductions including:
- Home office expenses
- Vehicle and travel costs
- Work-related phone bills
- Marketing and advertising
- Equipment depreciation
💡 Check out our full guide: What Tax Deductions Can Sole Traders Claim?
Small Business Company Tax Rates: Example Scenarios
Scenario 1: Sole Trader
- Income: $90,000
- Tax Payable: Approx. $17,547 (after tax-free threshold)
Scenario 2: Small Company (<$50M turnover)
- Net Profit: $120,000
- Corporate Tax: $30,000 (25%)
Scenario 3: Trust with Distributions
- Net Profit: $100,000
- Distributed equally to two beneficiaries, each pays personal tax on $50,000
Key Takeaways for Small Businesses
- Choose the right structure to optimise your tax outcome
- Monitor your annual turnover to remain under tax thresholds (for GST, small business concessions)
- Keep good records to maximise your deductions
- Lodge BAS and tax returns on time to avoid ATO penalties
- Consider working with a registered accountant for ongoing support
Need Help Navigating Small Business Taxes?
Whether you’re unsure of how much tax your business needs to pay, what structure suits you best, or how to lodge accurately—Accountants Direct is here to help.
- Registered Tax Agents
- Experts in sole trader, company, and trust tax
- Bookkeeping, BAS, GST, payroll & tax returns
- Transparent pricing, no hidden fees
- Phone & in-person consultations
📞 Call 1300 829 746 or Book Your Tax Appointment Now
FAQs
1. How much tax does a small business pay in Australia?
It depends on your structure. Sole traders pay personal income tax (0–45%), while small companies pay 25% if they meet base rate criteria.
2. Do I need to register for GST?
Yes, if your turnover exceeds $75,000 annually. You’ll need to charge and report GST.
3. What’s the benefit of registering as a company?
Companies benefit from a fixed tax rate (25%) and limited liability, but face more compliance requirements.
4. Can I get tax deductions as a small business?
Absolutely. You can claim deductions on expenses related to running your business, from travel and marketing to home office costs.
5. Does Accountants Direct help with company setup and compliance?
Yes, we offer end-to-end support for company registration, structure advice, and all ongoing tax obligations.
