Running a business in Australia means juggling more than sales and staff. The tax side of the operation is its own ongoing conversation with the ATO, and the rules shift more often than most owners realise.
The good news is, you don’t have to memorise every section of the tax act to stay compliant. You just need a clear picture of what’s actually on your plate, what’s changing in 2026, and where the common traps sit.
We help owners across Epping and Melbourne’s north work through these questions every week at RPS Accountants. Here’s a plain-English walkthrough of the responsibilities that matter most, and the ones quietly costing other businesses real money.
When do you need to register for GST?
The threshold is $75,000 in annual turnover. The moment your business is on track to hit that figure across any rolling 12 months, you have 21 days to register.
Most owners get caught out by the projection, not the actual number. If you signed a contract today that pushes your year-end above $75k, the clock starts now. Not at the end of the financial year.
Ride-share and taxi drivers register from dollar one, regardless of turnover. Voluntary registration can also make sense if your suppliers charge GST and you want to claim it back. We can run that maths with you before you decide.
How does Payday Super change your obligations?
From 1 July 2026, super has to land in your employee’s fund within seven business days of paying their wages. Quarterly super is gone. This is one of the biggest payroll shifts in a decade.
The ATO can estimate your Superannuation Guarantee Charge from your Single Touch Payroll data, then chase you for it. Miss the window and directors can become personally liable far quicker than under the old system.
If you run payroll yourself, this is the year to tighten your processes. Cloud accounting software, automated super lodgement, and a calendar reminder on every payday will save a lot of stress. We’re happy to audit your payroll setup before the change bites.
Could a Director Penalty Notice catch you out?
If your company falls behind on PAYG, GST, or super, the ATO can issue a Director Penalty Notice. That notice makes you personally liable for the company’s debt, even if the company collapses.
A non-lockdown DPN gives you 21 days to act. A lockdown DPN (issued when returns are late) gives you only one option: pay the full debt. Your family home, savings, and personal assets are on the table either way.
The simplest defence is lodging everything on time, even if you can’t pay. Lodgement gives you options. Silence closes them off. We’ve helped plenty of directors fix things before a DPN ever arrived, and the difference in stress is huge.
When should you switch to a company structure?
Most owners start as sole traders because it’s cheap and quick. The shift to a Pty Ltd company usually makes sense once profits push you into the higher personal tax brackets, or when liability becomes a real concern.
Companies pay 25% tax (for base rate entities under $50m turnover). That’s lower than the 32.5% personal bracket and well under the 45% top rate. The structure also separates your business risk from your personal assets.
The trade-off is cost and complexity. Annual ASIC fees, separate tax returns, FBT considerations, and Division 7A rules on owner loans all come with the package. Sit down with us before you make the switch, because unwinding a poorly chosen structure later is far more expensive.
What deductions can owners legally claim?
The basic test is whether the expense was incurred in earning your business income. Genuine business spending is generally deductible. Private spending isn’t. The grey zone is what trips most owners up.
Common legitimate deductions include rent, software subscriptions, accountant fees, motor vehicle expenses (with a logbook), home office costs if you work from home, marketing, tools, insurance, and depreciation on assets.
The ATO is increasingly fussy about substantiation. If you can’t produce the receipt or the logbook, the deduction can be disallowed and you’ll pay tax plus interest. We tell clients to photograph every receipt the day they get it. Habits beat heroic year-end record reconstruction every time.
How do you avoid the Division 7A loan trap?
If your company pays your personal expenses or lends you money, that’s a Division 7A loan in the ATO’s eyes. Left unmanaged, it gets treated as a fully taxable dividend, which means tax at your marginal rate.
The fix is to formalise the loan with a written agreement, set the minimum interest rate (the benchmark rate published by the ATO each year), and meet the minimum annual repayments. The standard term is seven years for unsecured loans.
Many owners discover the trap years later when the accountant flags a growing director loan account. By then, the cost to fix it can be brutal. A quick review now, while the balance is small, is much cheaper than the cleanup later.
What happens if you fall behind on tax?
The General Interest Charge applies to overdue tax debts and is currently sitting above 11% a year, compounding daily. That builds up quickly on a missed BAS or income tax bill.
The ATO has tightened its approach since 2024. They’re far less willing to grant generous payment plans than they were during COVID, and they’re more aggressive about recovering older debts.
If you’re behind, the worst move is silence. Reach out to the ATO or your accountant before the debt becomes a recovery action. Payment plans are still available, and a remission of interest is sometimes possible if you have a clean lodgement history. We’ve negotiated arrangements for clients facing five and six-figure debts, and the outcomes are almost always better when you act early.
How does the 2026 budget affect your bill?
The 2026 federal budget brought a few shifts worth knowing about. The proposed Division 296 tax adds an extra 15% to super earnings above $3 million. The instant asset write-off threshold is set to continue at $20,000 per asset for eligible small businesses, but the rules tighten each year.
Discretionary trust distributions are also back in the spotlight, with a proposed 30% minimum tax on certain distributions. If your business uses a family trust, this could materially change your tax position from the next financial year.
Budget changes can take months to flow through to legislation. We track the updates closely and flag the ones that actually affect our clients, rather than the headlines that don’t.
Common ATO audit triggers small businesses miss
The ATO runs sophisticated data matching across banks, payment platforms, contractors, real estate, and crypto exchanges. Mismatches between what you report and what they already know are the fastest trigger.
Cash-heavy businesses (hospitality, trades, beauty, retail) attract closer attention because of historical underreporting. So do owners who claim unusually high deductions compared to industry benchmarks.
Late lodgements, sudden swings in reported income, missed super payments, and contractor payments that don’t match a Taxable Payments Annual Report all raise flags. None of these are individually fatal, but stacked together they push your risk score up sharply.
Tax-saving strategies most owners miss
Three legitimate strategies show up in client reviews more often than they should. Concessional super contributions to reduce taxable income. Prepaying deductible expenses before 30 June. And using the instant asset write-off correctly across the right asset categories.
Trust distributions, where appropriate, can also balance income across family members at lower tax brackets. The rules are tightening, but with proper documentation and the right resolutions in place, the strategy still works for many business families.
The biggest miss we see is leaving the planning until June. By then, your options have shrunk dramatically. A 30-minute conversation in March often saves thousands by July.
The penalties for late lodgement explained
Failure to lodge on time penalties start at one penalty unit per 28 days late, capped at five units for small entities. A penalty unit is currently $330, so a five-unit cap is $1,650 per overdue return.
For medium and large entities, the penalty doubles or quintuples. And the penalty applies per overdue return, not per business. Miss multiple BAS lodgements and the figure climbs fast.
On top of the penalty, the General Interest Charge applies to any tax owing. Lodging on time, even when you can’t pay, almost always reduces the total damage. We push clients hard on this rule because the savings are immediate and certain.
Building a year-round tax planning calendar
The best tax outcomes come from owners who treat tax planning as a year-round habit, not an EOFY scramble. We usually map four key checkpoints across the calendar.
In September, we review the prior year’s actual results against expectations. In December, we project the current year and identify cash flow pressure points. In March, we run a proper tax planning session with strategies that still have time to work. In June, we finalise positions and tidy any loose ends.
This rhythm catches issues early, smooths out tax payments, and removes the EOFY surprise factor. Owners who run on this calendar tend to have a lot fewer panicked phone calls in July.
Hiring your first employee: tax basics
The first hire changes your tax life more than most owners expect. You’ll need to register for PAYG withholding, set up Single Touch Payroll reporting, organise workers compensation insurance, and start contributing to super.
The new Payday Super rules mean you need to pay super at the same time as wages from 1 July 2026. Your payroll system has to handle that timing cleanly, or you’ll face SGC charges quickly.
Get your employment contract, fair work compliance, and onboarding checklist sorted before the first payday lands. The cleanup cost on a sloppy first hire is much higher than getting it right at the start. We help clients build a simple, repeatable onboarding flow they can use for every future hire.
Want a clearer picture of where your business stands?
Tax responsibilities don’t have to feel like a moving target. With the right systems, the right calendar, and a few sensible habits, most owners can stay ahead of the ATO without losing sleep.
If you’re staring at a pile of overdue paperwork, a confusing letter, or just wondering whether your setup still suits your business, that’s the perfect time for a proper conversation. Bring your latest BAS, last tax return, and any questions that have been nagging you.
A call or email to our Epping office is the easiest first step. We’ll book a sit-down, look at the numbers properly, and tell you straight where your gaps and opportunities sit.
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