Tax Return Guide for Small Business: GST, BAS, Super and Records

A sole trader does not lodge a separate business tax return. Business income and deductions flow through the individual income tax return via the business and professional items schedule. The net business income is added to any other assessable income and taxed at the resident individual rates. The Tax Return Guide for Individuals sets out the 2025-26 resident rate table and how taxable income is calculated.

A partnership is not itself a taxed entity. The partnership lodges an income tax return to report its income and deductions, but any tax liability falls on the individual partners. Each partner includes their share of net partnership income, or their share of a partnership loss, in their own individual return.

Companies and trusts have separate lodgment requirements and tax treatment that this guide does not cover.

GST registration becomes compulsory once a business's GST turnover reaches $75,000 in a 12-month period, whether that is a past 12 months or a projected 12 months. Non-profit bodies have a higher threshold of $150,000. Once the threshold is exceeded, the business must register within 21 days.

Taxi drivers and rideshare providers must register for GST from the first trip, regardless of their total turnover.

Businesses below the threshold can register voluntarily. A registered business collects GST on taxable sales, calculates GST credits on eligible business purchases, and reports both through the BAS. A business that is not registered cannot collect GST, cannot claim GST credits, and must not label a sales document as a "Tax Invoice."

A GST-registered business reports GST and potentially other obligations through a Business Activity Statement. GST on sales is entered at label 1A and GST credits on purchases at label 1B. The difference is the net GST amount, which is either payable to the ATO or refundable to the business.

Quarterly reporting is the standard for businesses with a GST turnover under $20 million. A quarterly BAS is generally due on the 28th of the month following the end of the quarter: the quarter ending 30 September is due 28 October, the quarter ending 31 December is due 28 February, and so on. Businesses that lodge through a registered tax agent generally receive roughly four additional weeks to lodge and pay.

A nil BAS must still be lodged on time when no GST is payable and no credits are being claimed. Failure to lodge attracts failure-to-lodge penalties.

A BAS can also be used to report Pay As You Go (PAYG) withholding from employee wages, PAYG instalment amounts for the business owner's own income tax, fuel tax credits, and fringe benefits tax instalments, depending on the business's circumstances.

A business with aggregated turnover of less than $10 million can immediately deduct the business portion of an eligible depreciating asset if its cost is less than $20,000. The threshold applies per asset, not to total asset spending across the year. The asset must be first used or installed ready for use in the income year the deduction is claimed.

The $20,000 threshold was made a permanent concession in the 2026-27 Federal Budget on 12 May 2026. Before that, successive income years had temporary thresholds legislated year by year.

For a GST-registered business, the $20,000 limit is applied to the GST-exclusive cost, because the GST component is separately recovered through the BAS. For a business not registered for GST, the threshold applies to the GST-inclusive cost.

Where an asset costs $20,000 or more, it enters the small business simplified depreciation pool. The deduction rate in the pool is 15% in the first year the asset is added, and 30% per year thereafter on the diminishing value. Only the business-use portion of any asset is deductible; any private-use portion is excluded. For vehicles, the business-use percentage must be established using an ATO-compliant logbook kept over a continuous 84-day period. The Small Business Vehicle Logbook tool captures the trip-by-trip records and calculates the business-use percentage the ATO requires.

The super guarantee rate for 2025-26 is 12% of an employee's ordinary time earnings. The 12% rate is the final step in a legislated series of annual increases and applies from 2025-26 onward. Ordinary time earnings generally means wages and salary paid for ordinary hours worked, not overtime.

From 1 July 2026, Payday Super replaced the former quarterly super system. Employers must now pay super contributions to the employee's nominated fund at the same time as each pay run. Under the previous quarterly model, employers collected super across the quarter and remitted it by the 28th day after the quarter ended. That quarterly model applied only through 30 June 2026.

The super guarantee applies only up to the maximum contribution base, which is $62,500 per quarter for 2025-26. An employer is not required to calculate or pay super on ordinary time earnings above that quarterly base for any one employee.

Where super contributions are not paid on time or at the correct rate, the employer becomes liable for the super guarantee charge. The charge includes the unpaid super, an interest component calculated from the start of the relevant period, and an administration fee. Unlike ordinary super contributions, the super guarantee charge is not tax-deductible.

Business records are generally kept for five years from the date the record was prepared or the transaction occurred. Records a business keeps typically include sales records, purchase records, bank and credit card statements, payroll records, and stocktake records. For assets that may be subject to capital gains tax on disposal, records of acquisition cost, capital improvements, and disposal date are also needed.

Only a GST-registered business may issue a document labelled "Tax Invoice." A business not registered for GST must not use this heading, even if the document is otherwise detailed and accurate. A non-registered business issues a receipt, a sales invoice, or a similar document without the "Tax Invoice" label. The Small Business Invoice Generator tool handles this automatically — it produces a "Tax Invoice" for GST-registered businesses and a plain "Invoice" for non-registered ones.

A purchaser needs a valid tax invoice from the supplier to claim a GST credit in the BAS. If a supplier is not GST-registered, there is no valid tax invoice and no GST credit is available to the buyer.

Three record-keeping tools are now available in the Tools section of this site: the Small Business Income & Expense Ledger for tracking business income and deductible expenses across the year, the Small Business Vehicle Logbook for recording vehicle trips and establishing the business-use percentage required for the logbook method, and the Small Business Invoice Generator for producing GST-compliant tax invoices or standard invoices for non-registered businesses.

Example only. A sole trader operates a tradesperson business with annual GST turnover above $75,000. The business is registered for GST, lodges quarterly BAS reports, and employs one part-time worker. During the year the operator purchases a power tool for $8,000 (GST-exclusive), used entirely for business. As the cost is under $20,000 and the business has aggregated turnover under $10 million, the full $8,000 is deductible in that income year under the instant asset write-off.

Super of 12% of the employee's ordinary time earnings is paid to the part-time worker's fund at each pay run under Payday Super. The quarterly BAS reports the net GST and the PAYG withholding on wages.

The operator's net business income, after all allowable deductions, flows into the individual tax return. The tax payable depends on total taxable income and the 2025-26 resident individual rates, which are set out in the Tax Return Guide for Individuals.

Does a sole trader lodge a separate business tax return?

No. A sole trader reports business income and deductions through the individual income tax return via the business and professional items schedule. The net business income is part of the sole trader's assessable income and taxed at the individual resident rates.

What is GST turnover and how does it differ from accounting revenue?

GST turnover is the total value of taxable and GST-free supplies, excluding input-taxed supplies and the GST component itself. It differs from accounting revenue, which may include amounts not counted for GST registration purposes. The ATO provides a specific method for calculating GST turnover.

What changed on 1 July 2026 for employer super obligations?

Payday Super came into effect. Employers must now pay super contributions to each employee's fund at the same time as each pay run. Under the previous system, employers accumulated super across the quarter and remitted it by the 28th day after the quarter ended. The old quarterly model ended on 30 June 2026.

Can a business claim the instant asset write-off on a vehicle used partly for private purposes?

Only the business-use portion is deductible. If a vehicle is used 60% for business, only 60% of the cost is brought into the instant asset write-off calculation, and that 60% portion must still be below $20,000 to qualify for the immediate deduction.

Can a business that is not registered for GST label an invoice as a Tax Invoice?

No. The "Tax Invoice" label is reserved for GST-registered businesses. A non-registered business must not use this term. The buyer cannot claim a GST credit based on a document from a non-registered supplier, regardless of how the document is labelled.