Small Business Tax Australia 2025-26: Rates, Deductions and Key Dates

Australia’s small business tax system is not a single tax. It is a stack of overlapping obligations: income tax, GST, PAYG withholding, PAYG instalments, superannuation, payroll tax (if you have staff and the right turnover), and potentially FBT. Each has its own registration requirements, rates, and deadlines. Each is administered differently depending on your business structure.

The 2025-26 financial year brought several changes that affect small business owners directly: the Super Guarantee rate reached its permanent level of 12%, the $20,000 instant asset write-off was legislated through 30 June 2026, and in a move that caught many business owners off guard, ATO interest charges (GIC) became non-deductible from 1 July 2025. The 2026 Federal Budget then announced the write-off will be made permanent from 1 July 2026, though this is not yet law.

This guide covers every tax your small business is likely to encounter in 2025-26, with correct rates, thresholds, deadlines, and the changes you need to act on now. Our registered tax agents in Adelaide work with small business owners across South Australia on all of these obligations.

2025-26 Small Business Tax Quick Reference

All key rates and thresholds for the financial year ending 30 June 2026.

Your Business Structure Determines Your Tax Obligations

Before covering individual taxes, it is worth noting that your business structure is the single most important factor in how you are taxed. Sole traders, companies, partnerships, and trusts are all taxed differently. The structure you choose affects your tax rate, how you pay yourself, and which concessions you can access. For a side-by-side comparison, see our guide on choosing the right business structure.

The 8 Taxes Every Australian Small Business Should Understand

1. Income Tax and Company Tax

How income tax works depends on your structure. Sole traders pay income tax on their entire net business profit at personal marginal rates through their annual income tax return. pay a flat rate on taxable income: 25% for Base Rate Entities (BREs) or 30% for all other companies.

To qualify as a Base Rate Entity and access the 25% rate in 2025-26, your company must: (1) have aggregated turnover below $50 million, and (2) earn no more than 80% of assessable income from passive sources (such as interest, rent, or dividends). BRE status is recalculated every year, so a company that was a BRE in 2024-25 may not qualify in 2025-26 if circumstances change.

For the full detail on company tax rates and how franking credits interact with distributions, see our company tax return services page.

2. Goods and Services Tax (GST)

GST is a flat 10% tax on most goods and services supplied in Australia. Your business must register for GST if your annual GST turnover reaches or is expected to reach $75,000 ($150,000 for not-for-profit bodies). Once registered, you collect GST on sales and claim GST credits on eligible business purchases, with the net amount reported and paid through your Business Activity Statement (BAS).

Most small businesses lodge BAS quarterly. The GST-inclusive price on customer invoices must be accompanied by a tax invoice showing your ABN and the GST amount. If you use the cash accounting method (available for businesses with turnover under $10 million), GST is reported when cash is received and paid, rather than when invoices are issued. This is a valuable cash flow tool for small businesses with slow-paying customers.

3. PAYG Withholding

If your business employs staff or pays contractors who have not provided an ABN, you are required to withhold tax from those payments under Pay As You Go (PAYG) withholding. This is not a tax on your business. It is an amount held back from employee wages and contractor payments and forwarded to the ATO on their behalf. You must register for PAYG withholding before your first payment and report via Single Touch Payroll (STP).

The amount withheld depends on the employee's earnings and the tax withheld declaration they provide. For contractors who supply their ABN, PAYG withholding does not apply unless the contractor quotes a flat 47% rate (no ABN supplied).

4. PAYG Instalments

PAYG instalments are a prepayment system for your own income tax. If your business or investment income is above ATO thresholds, the ATO will require you to pay tax throughout the year rather than as a lump sum at tax time. Quarterly instalment amounts are either set by the ATO (based on your prior year's income) or calculated using your actual income for the quarter.

PAYG instalments are reported and paid through your BAS if you are registered for GST, or through a separate instalment activity statement (IAS) if not.

5. Payroll Tax (State Tax)

Payroll tax is a state and territory tax on wages paid above a defined threshold. Unlike the federal taxes above, payroll tax rates and thresholds differ significantly by state. In South Australia, the payroll tax rate is 4.95% on wages above the annual threshold of $1.5 million. If your business operates across multiple states, separate thresholds apply in each jurisdiction.

Payroll tax is broader than just wages. It typically includes superannuation contributions, fringe benefits, allowances, and bonuses. New SA businesses should monitor whether their total wages liability is approaching the threshold, as registration and lodgment obligations apply from the month the threshold is first exceeded.

6. Fringe Benefits Tax (FBT)

FBT applies to certain non-cash benefits provided to employees, including company cars, car parking, entertainment, and private health insurance contributions. The FBT rate for the year ending 31 March 2026 is 47%, applied to the grossed-up taxable value of the benefit.

Many small businesses provide cars to owners or employees without properly considering the FBT implications. A vehicle used partly for private purposes creates an FBT liability unless a valid logbook (covering at least 12 continuous weeks) is maintained to establish the business-use percentage. For an overview of FBT planning, see our fringe benefits tax services.

7. Capital Gains Tax (CGT)

CGT applies when your business sells a capital asset, including commercial property, business goodwill, shares, or equipment. From 1 July 2027, the 50% CGT discount for individuals is being replaced by CPI indexation plus a 30% minimum tax on gains. Small business CGT concessions remain unchanged: the 15-year exemption, active asset reduction, retirement exemption, and rollover are all intact.

The four small business CGT concessions can significantly reduce or eliminate a CGT liability on the sale of a business asset. Access requirements include a maximum net asset value test ($6 million) and the active asset test. For specific CGT advice on your situation, see our capital gains tax services in Adelaide.

8. Superannuation Guarantee

The Super Guarantee is an employer obligation, not a business tax, but it must be managed alongside your tax obligations. From 1 July 2025, the SG rate is 12% of ordinary time earnings, and this is the legislated permanent rate. Quarterly due dates are 28 October, 28 January, 28 April, and 28 July. Super paid late is not tax-deductible, unlike super paid on time.

Payday super starts 1 July 2026. From that date, SG contributions must be remitted to the employee’s fund at the time of each wage payment, not quarterly. This is a major operational change for businesses that currently fund quarterly super from retained earnings. Review your payroll process now.

Key Small Business Tax Concessions in 2025-26

$20,000 Instant Asset Write-Off

Eligible small businesses with aggregated turnover under $10 million can immediately deduct the full cost of an eligible depreciating asset costing less than $20,000 in the year it is first used or installed. This applies to each asset individually, so multiple eligible assets can each be written off in the same year. The $20,000 threshold applies to the GST-exclusive cost for registered businesses or the GST-inclusive cost for unregistered businesses.

The $20,000 threshold for 2025-26 was legislated in November 2025. The 2026 Federal Budget then announced the $20,000 threshold will be made permanent from 1 July 2026, but this measure is not yet law as of May 2026. Assets must be first used or installed ready for use before 30 June 2026 to qualify under the current legislated extension. For authoritative detail, see the ATO's instant asset write-off page.

Examples of eligible assets include tools, laptops, point of sale systems, office furniture, vehicles (subject to the luxury car tax limit and business-use percentage), and other depreciating equipment. Leased assets do not qualify. If a vehicle is used 70% for business and 30% privately, only 70% of the cost is deductible.

Small Business Income Tax Offset

Sole traders and partners in a partnership or trust who carry on a small business with turnover under $5 million can access a tax offset of 16% of the tax payable on their net small business income, capped at $1,000 per year. This offset is applied automatically by the ATO when your return is assessed and does not need to be claimed separately.

Simplified Depreciation Rules

Small businesses with turnover under $10 million can use simplified depreciation: assets below the write-off threshold are immediately deducted; assets above the threshold are added to a pool and depreciated at 15% in the first year and 30% in subsequent years. If the pool balance falls below the threshold at any time, the entire remaining pool balance can be written off immediately.

Other Concessions Worth Knowing

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  GST cash accounting: available for turnover under $10M. Report GST when cash is received, not when invoiced.
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  Immediate deduction for prepaid expenses: eligible small businesses can deduct prepaid expenses of up to 12 months in the year of payment.
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  Trading stock simplified rules: if the estimated change in trading stock is $5,000 or less, small businesses can estimate rather than do a full stocktake.
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  FBT car parking exemption: employer-provided car parking is FBT-exempt if the employer’s income is below $10M.

Major Tax Changes Affecting Small Businesses in 2025-26

ATO Interest Charges Are No Longer Tax-Deductible

The practical consequence: carrying an ATO debt is now materially more expensive than it was before 1 July 2025. At the current GIC rate of 10.96% per annum, non-deductible interest on a $50,000 ATO debt costs a company taxed at 25% an additional $1,370 per year in lost tax savings versus the pre-July 2025 position. Pay ATO obligations on time, or negotiate a payment arrangement with the ATO before debt accumulates.

Work from Home Deductions: 70 Cents Per Hour

The ATO's fixed rate method for work-from-home deductions is 70 cents per hour for 2025-26. This covers electricity, internet, phone, stationery, and computer consumables. It does not cover the decline in value of home office furniture or equipment, which must be claimed separately. You must keep a record of hours worked at home, either a timesheet, diary, or similar document. Estimates are no longer accepted.

Super Guarantee Now Permanently at 12%

The SG rate increased from 11.5% to 12% on 1 July 2025 and is now the legislated permanent rate. There are no further scheduled increases. If you have not yet updated your payroll settings to reflect the 12% rate, this is overdue.

Payday Super: Prepare Before 1 July 2026

From 1 July 2026, you must remit SG contributions with each pay run, not quarterly. This applies to all employers, regardless of size. Businesses that currently set aside super separately and pay quarterly will need to restructure their payroll and cash flow processes. If your small business bookkeeping is not already integrated with a payroll solution that supports payday super, July 2026 is the deadline for getting that in order.

ATO 2025-26 Focus Areas for Small Businesses

The ATO has consistently signalled which areas it is reviewing in 2025-26 through its compliance program and public guidance. Business owners with activity in these areas should ensure their records are complete and their claims defensible.

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  Work-related expense claims: the ATO continues to scrutinise overclaimed home office, vehicle, and travel deductions. The fixed-rate 70 cents/hour method requires genuine records of hours worked, not estimates.
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  GST compliance: the ATO's data matching program now cross-references invoicing software, bank feeds, and BAS lodgments. Inconsistencies between lodged BAS figures and third-party data are automatically flagged.
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  Cash economy: businesses in the trades, hospitality, and personal services sectors are specifically targeted for unreported cash income. The ATO uses industry benchmarks to identify businesses whose reported income is significantly below the median for their sector and location.
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  Contractor payments (TPAR): the Taxable Payments Annual Report is required for businesses in construction, cleaning, courier, IT, security, road freight, and labour hire. Missing or inaccurate TPAR lodgments are a growing enforcement focus.
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  Rental property and investment deductions: the ATO cross-checks rental property claims with bank data, depreciation schedules, and property management records. Overclaimed interest, repairs versus capital improvements, and missing apportionment of personal use are common triggers.

For business owners wanting to understand the ATO’s specific compliance expectations for their industry, our business advisory team can review your current position before any ATO contact arrives.

How The Kalculators Supports Small Business Owners in Adelaide

Our registered tax agents and business advisers work with sole traders, companies, partnerships, and trusts on every obligation covered in this guide. We prepare and lodge small business tax returns, manage quarterly BAS lodgment, advise on structure optimisation, and ensure clients are maximising every legitimate deduction available.

We also help businesses prepare for the payday super changes landing on 1 July 2026, review payroll systems for compliance, and advise on the timing and method for instant asset write-off claims.