Businesses operating through a company structure with an aggregated turnover under $50 million generally benefit from a reduced company tax rate of 25% "Base Rate Entity", compared with the standard corporate tax rate of 30%.

From the 2021–22 income year onwards, companies that are base rate entities must apply the 25% company tax rate.

A company is a base rate entity for an income year if:

• The company’s aggregated turnover for that income year is less than the aggregated turnover threshold for that income year, and
• It has 80% or less of their assessable income in that income year that is base rate entity passive income – this replaces the requirement to be carrying on a business from the 2017–18 income year onwards.

The aggregated turnover from any prior income year is irrelevant when working out if a company is a base rate entity for any particular income year.

Instant Asset Write-Off

• Eligible small businesses may be able to immediately deduct the cost of business assets (such as tools, equipment, or vehicles) rather than depreciating them over several years.
• Eligibility and thresholds are determined each financial year.

Instant Asset Write-Off Extended

• $20,000 Threshold: Small businesses can immediately deduct the full cost of eligible assets costing less than $20,000, first used or installed ready for use by 30 June 2026.
• Per Asset Basis: The limit applies per asset, allowing multiple assets to be written off instantly.
• Reversion: Without further extension, this limit is scheduled to revert to $1,000 on 1 July 2026.

GST Registration

A business must register for GST if its annual turnover reaches $75,000 or more. Once registered, the business must:

• Charge 10% GST on most goods and services.
• Lodge Business Activity Statements (BAS).
• Report GST collected and GST paid.

PAYG Withholding

If a business employs staff, it must register for PAYG withholding, which means:

• Withholding tax from employee wages.
• Reporting amounts to the ATO.
• Paying withheld tax to the ATO.

Superannuation Guarantee Rate

Major Change: Payday Super (1 July 2026)

• Real-time Payments: From 1 July 2026, employers must pay super guarantee (SG) contributions for employees at the same time as their salary and wages, rather than quarterly.
• Preparation: The ATO is urging businesses to review payroll systems and switch to digital, STP-enabled software to accommodate these frequent payments.
• Super Guarantee Rate: The SG rate for 2025–26 remains at 12%

Business Expenses

Businesses can generally claim deductions for expenses incurred in earning income, including:

• Office rent and utilities
• Business insurance
• Professional fees (accountants, lawyers)
• Software subscriptions
• Marketing and advertising

Expenses must be properly documented and directly related to the business.

Motor Vehicle Deductions

Business owners may claim vehicle expenses using:

• Cents per kilometre method (limited to 5,000 km)
• Logbook method (actual expenses based on business use percentage) Maintaining accurate records is essential to support deductions.

Rental Income Must Be Declared

All rental income must be declared in your tax return, including:

• Weekly rent payments
• Short-term accommodation income
• Insurance payouts for lost rent

Deductible Property Expenses

Property investors can claim a wide range of expenses related to generating rental income, including:

• Interest on investment property loans
• Property management fees
• Council rates and water charges
• Insurance premiums
• Repairs and maintenance

These deductions can help reduce taxable income.

Depreciation Deductions

Investors may claim depreciation on the building and certain assets within the property, such as:

• Appliances
• Carpet and flooring
• Air conditioning
• Fixtures and fittings

A quantity surveyor’s depreciation schedule is often used to maximise allowable deductions.

Negative Gearing

If the costs of owning an investment property exceed the rental income, the resulting loss may be used to offset other taxable income, such as salary or business income.

Capital Gains Tax (CGT)

When an investment property is sold, any profit may be subject to Capital Gains Tax. However:

• Individuals may receive a 50% CGT discount if the property is held for more than 12 months.

Record Keeping

The ATO recommends keeping all property-related records for at least five years, including:

• Purchase contracts
• Loan statements
• Renovation receipts
• Depreciation schedules

Good record keeping helps maximise deductions and simplify tax reporting.

• Keep separate bank accounts for business or property expenses.
• Store digital copies of receipts and invoices.
• Review your tax position before 30 June each year.
• Seek professional advice before making major financial or property decisions.