Tax compliance for small business in Australia: registrations, reporting, and deadlines

Tax compliance for a small business means meeting the lodgement and payment obligations that attach to the business from day one: registering for an ABN, TFN, and GST where required; lodging BAS and income tax returns on time; reporting wages through Single Touch Payroll; paying super guarantee by the quarterly due dates; and keeping records that support every figure reported to the ATO. For businesses in Queensland, state payroll tax may also apply once Australian wages cross the $1.3 million threshold. Getting the basics right at setup, and treating lodgement dates as fixed points in the business calendar, prevents most of the problems that generate ATO penalties, general interest charges, and cash flow shocks.

Key takeaways

• GST registration is compulsory once projected GST turnover reaches $75,000 ($150,000 for non-profits). For taxi, limousine, and rideshare drivers, registration is required from the first dollar.
• Quarterly BAS is due on the 28th of the month after each quarter ends, except the December quarter which is due 28 February. Lodging through a registered BAS or tax agent gives an additional four weeks for Q1, Q3, and Q4 (no extension for Q2).
• The super guarantee rate is 12 per cent from 1 July 2025. Quarterly due dates (28 Oct, 28 Jan, 28 Apr, 28 Jul) apply until 30 June 2026, when Payday Super takes over.
• In Queensland, payroll tax applies once Australian taxable wages exceed $1.3 million a year ($25,000 a week). The rate is 4.75 per cent up to $6.5 million, and 4.95 per cent above that. Grouped entities have wages combined for the threshold test.
• Failure to lodge penalties start at $330 per 28-day period for small entities, capped at $1,650. General interest charge on unpaid tax debts is no longer tax deductible from 1 July 2025, which makes ATO debt materially more expensive.
• Business records must be kept for at least 5 years. Employee records under the Fair Work Act must be kept for 7 years.

Business registrations: what you need and when

Before the first invoice goes out, most small businesses need some combination of an ABN, a TFN, and possibly GST, PAYG withholding, and Fuel Tax Credits registrations. Each does a different job, and getting them in the right order at the right time saves amending BAS and income tax returns later.

ABN, TFN, and business names

An Australian Business Number (ABN) identifies your business to customers, suppliers, and government. You need one if you are carrying on an enterprise in Australia. Without an ABN on your invoices, other businesses paying you are generally required to withhold tax at 47 per cent from the payment. Sole traders apply for an ABN using their individual TFN. Companies, partnerships, and trusts apply for their own ABN and TFN because they lodge their own returns.

A Tax File Number (TFN) identifies the taxpayer to the ATO. Sole traders use their personal TFN for business income, which forms part of their individual tax return. Companies, partnerships, and trusts each need their own TFN. TFNs should never appear on customer invoices, they are internal ATO identifiers.

If you trade under a name other than your own legal name (sole trader) or your company's registered name, you also need to register that business name with ASIC. This is separate from the ABN and is often missed by sole traders operating under a brand.

GST registration and the $75,000 threshold

You must register for GST within 21 days once your projected GST turnover reaches $75,000 a year ($150,000 for non-profits). GST turnover is your gross business income excluding GST itself, not profit. The test is forward-looking: if you reasonably expect turnover to reach the threshold in the current month plus the next 11 months, you should register.

Taxi, limousine, and rideshare drivers must register from the first dollar of turnover, regardless of how small the business is.

Voluntary registration below $75,000 can make sense when most customers are other GST-registered businesses (who can claim back the GST you charge), or when the business has significant startup costs with GST that you want to recover through input tax credits. It is often the wrong call when your customers are households, because adding 10 per cent to prices can hurt competitiveness, and the compliance overhead of quarterly BAS outweighs the benefit.

Registration can't be backdated casually. If you miss the threshold and keep invoicing without GST, you generally still owe the GST on sales made after the registration point, even though you didn't charge it. That amount comes out of your margin.

PAYG withholding, STP, and other employer registrations

The moment you hire your first employee, you need to register for PAYG withholding, set up Single Touch Payroll (STP) reporting, and arrange for super guarantee payments through a compliant fund or clearing house. STP sends payroll data to the ATO every pay run. It does not replace the need to actually pay super, which is a separate cash payment to the fund.

If you provide cars, entertainment, or other non-cash benefits to employees, you may also have Fringe Benefits Tax (FBT) obligations. The FBT year runs from 1 April to 31 March, which catches many employers out because it doesn't align with the 30 June income tax year.

Record keeping: what the ATO and Fair Work expect

Business records need to explain every transaction relevant to your tax and super affairs, be in English or readily convertible to English, and be kept in a form the ATO can access if it asks. Digital records are accepted. The quality issue is usually not format, it's completeness and consistency.

How long to keep records

The general rule under tax law is five years from the date the record was prepared, the transaction was completed, or the tax return or BAS was lodged (whichever is latest). Some records need to be kept longer.

 

Record type	Retention	Source of the rule
Tax invoices, receipts, BAS working papers, bank and loan statements	5 years	ATO (income tax and GST law)
Employee records: wages, timesheets, leave, super contributions, payslips	7 years	Fair Work Act
Asset records for depreciation and CGT	5 years after disposal	ATO (capital allowances and CGT)
Company registers, trust deeds, partnership agreements	Life of the entity	Corporations Act and trust law

 

Scanned copies of original documents are acceptable if they are clear, complete, and readable. Cloud accounting software combined with a receipt capture app (Hubdoc, Dext, or the native apps built into Xero, MYOB, and QuickBooks) usually handles all of this without manual filing.

What records you need

At a minimum, every small business should be able to produce:

• Sales records: tax invoices issued, point-of-sale summaries, online platform reports, and deposit records that reconcile to the bank account.
• Purchase and expense records: supplier tax invoices, receipts, proof of payment.
• Bank records: statements for all business accounts, loan statements, merchant facility reports.
• Payroll records: timesheets, payslips, PAYG withholding calculations, super payment confirmations, STP reports.
• Motor vehicle records: logbooks where the logbook method is used, odometer readings, fuel receipts.
• Asset records: purchase contracts, finance documents, depreciation schedules, and disposal records.
• Structural records: ABN and TFN details, company constitution or trust deed, partnership agreement, loan agreements with related parties.

BAS, GST, and PAYG: the reporting cycle

The Business Activity Statement is where most small businesses report GST, PAYG withholding, and PAYG instalments to the ATO. Getting the BAS cycle right is the single biggest compliance lever for a small business, because it drives cash flow discipline, catches bookkeeping errors quarterly instead of annually, and protects the business from failure-to-lodge penalties.

BAS due dates for 2025-26

Most small businesses lodge quarterly. Businesses with GST turnover of $20 million or more must lodge monthly, and smaller businesses can elect monthly if they want faster refunds or tighter cash flow visibility.

 

Quarter	Period	Self-lodge	Via registered agent
Q1	Jul–Sep 2025	28 Oct 2025	25 Nov 2025
Q2	Oct–Dec 2025	28 Feb 2026	28 Feb 2026 (no extension)
Q3	Jan–Mar 2026	28 Apr 2026	26 May 2026
Q4	Apr–Jun 2026	28 Jul 2026	25 Aug 2026

 

Monthly BAS is due on the 21st of the following month, with no agent concession. Annual GST returns (for businesses voluntarily registered below the threshold and reporting annually) are due 31 October, or with the income tax return.

PAYG withholding vs PAYG instalments

These two get confused constantly. They are separate obligations that happen to be reported on the same form.

PAYG withholding is tax you hold back from payments to other people: wages to employees, some contractor payments where no ABN was quoted, and certain other payments. The money isn't yours. You collect it on behalf of the ATO and remit it via BAS. If you spend it, you've effectively borrowed from the ATO, and catching up later is painful.

PAYG instalments are pre-payments towards your own income tax for the current year. The ATO works out the instalment amount based on the most recent lodged return and adjusts for the quarterly GDP uplift. You can vary the instalment if your current year result will be materially different, but over-varying downward can attract interest if you underpay.

Common BAS errors the ATO watches for

• Claiming GST credits on GST-free or input-taxed purchases (bank fees, residential rent, basic food, health services).
• Claiming full GST credits on purchases with a private-use component.
• Claiming GST credits on entertainment expenses where the underlying expense isn't deductible for income tax.
• BAS figures that don't reconcile to payroll reports (a common STP mismatch).
• Late lodgement of one quarter followed by an estimate for the next, creating a rolling reconciliation problem.
• Missing GST on sales where a customer refused to provide an ABN, treating it as private rather than taxable.

Super guarantee and Single Touch Payroll

Super guarantee is where small businesses most often get hurt, because late super has consequences that other late payments don't. Processing super in payroll isn't the same as paying it, and the ATO treats the difference seriously.

The 12 per cent rate and quarterly due dates

From 1 July 2025, the super guarantee rate is 12 per cent of ordinary time earnings for eligible employees. This is the final step in the legislated rate increases. Quarterly due dates for 2025-26 are 28 October, 28 January, 28 April, and 28 July. The payment must reach the employee's super fund by those dates, not just leave your bank account. Payments made on 28 July that don't clear the fund until 30 July are late.

Using the ATO's Small Business Superannuation Clearing House or a commercial clearing house (built into Xero, MYOB, and QuickBooks) is the standard approach. Build in at least 5 to 7 business days before the due date to allow for processing.

Payday Super from 1 July 2026

From 1 July 2026, Payday Super replaces the quarterly system. Employers will need to pay super at the same time as wages, with funds required to receive contributions within 7 business days of payday. For businesses used to accruing three months of super before paying, this is a material cash flow change that needs to be modelled and prepared for now, not in June.

What happens when super is late

Late super, even by one day, means the employer must lodge a Superannuation Guarantee Charge (SGC) statement and pay the SGC directly to the ATO. The SGC includes:

• The shortfall amount calculated on total salary and wages, not just ordinary time earnings (usually higher than the original SG).
• Nominal interest of 10 per cent per annum from the start of the quarter.
• An administration fee of $20 per employee per quarter.

The SGC is not tax deductible. The combination of a higher base, interest, admin fees, and no deduction makes late super materially more expensive than just paying it on time. For a growing Ipswich trades business with several apprentices and a team of four, a single missed quarter can easily turn a $6,000 super bill into a $10,000 cash cost after tax.

Queensland payroll tax: when it catches small businesses

Payroll tax is a state tax, separate from the federal obligations above. It's often dismissed as a big-business issue, which is how small and medium Queensland businesses end up registered retrospectively with interest and penalties attached.

Thresholds and rates for 2025-26

In Queensland, payroll tax applies once total Australian taxable wages exceed $1.3 million a year ($25,000 a week). Registration is required within 7 days after the end of the month in which the weekly threshold is first exceeded. The Queensland Revenue Office administers the tax.

Rates for 2025-26:

• 4.75 per cent where Australian taxable wages are $6.5 million or less.
• 4.95 per cent where Australian taxable wages exceed $6.5 million.
• Regional employers (primary business address in regional Queensland, and at least 85 per cent of taxable wages paid to regional employees) get a 1 per cent discount.
• A mental health levy applies to employers paying Australian wages above $10 million a year.

Ipswich is classified as regional for payroll tax purposes, so qualifying businesses based there typically pay 3.75 per cent rather than 4.75 per cent.

What counts as taxable wages

Taxable wages include salaries and wages, allowances, bonuses, commissions, director fees, employer super contributions, and in many cases payments to contractors. Contractor payments are often where businesses get caught. If the contractor is effectively providing labour rather than a result, the payments may need to be included in the wages base.

Grouping: the rule that catches family businesses

Related businesses can be grouped, which means their wages are added together for the threshold test. A business can be grouped where there is common control, common employees, or interrelated operations, or where one entity controls another's board.

A common Ipswich scenario: a husband and wife run two separate entities, a landscaping company and a related property maintenance trust. Each has Australian wages of $800,000, so neither crosses the $1.3 million threshold on its own. Grouped, combined wages are $1.6 million, which triggers registration. If the businesses have been operating this way for years without registering, back-payroll tax, interest, and penalties can apply. Grouping exposure should be reviewed annually, especially when a family runs multiple related entities.

The small business tax compliance calendar

A compliance calendar is the single most effective tool for avoiding penalties. Here's the annual rhythm for a typical GST-registered small business with employees, lodging quarterly through a registered agent.

Every pay run

• Process payroll and submit STP report on or before payday.
• Calculate super accruing for the quarter.

Monthly

• Reconcile bank accounts and credit cards.
• Review and code transactions, capture receipts.
• Monthly BAS due 21st of following month (if on monthly cycle).

Quarterly

• Super guarantee: 28 October, 28 January, 28 April, 28 July (funds must have received payment by these dates).
• BAS: 28 October (or 25 November via agent), 28 February, 28 April (or 26 May), 28 July (or 25 August).
• PAYG instalments: included on BAS.

Annually

• STP finalisation: by 14 July, so employees can lodge their individual returns.
• Taxable Payments Annual Report (TPAR): by 28 August for businesses in building and construction, cleaning, courier, road freight, IT, and security services that pay contractors.
• FBT return: 21 May (or 25 June via agent) if FBT applies. The FBT year runs 1 April to 31 March.
• Income tax returns: due dates vary by entity type and lodgement path, typically between 31 October (self-lodge) and 15 May the following year (via tax agent).
• Queensland payroll tax annual reconciliation: 21 July.

What happens when you miss a deadline

Missing one deadline isn't catastrophic. Ignoring it is. The ATO's penalty framework escalates predictably, and early engagement almost always produces a better outcome than waiting to be contacted.

Failure to lodge (FTL) penalties

For a small entity (turnover under $1 million), the FTL penalty is one penalty unit ($330 as at 1 July 2025) for each 28-day period a document is overdue, capped at five penalty units ($1,650 per document). Medium and large entities face higher multiples. The penalty applies to BAS, income tax returns, FBT returns, and other lodgements.

General interest charge and the deductibility change

Unpaid tax debts attract general interest charge (GIC), calculated daily on the outstanding balance. The rate is reset quarterly. For the 2025-26 year, GIC has been running at around 10 to 11 per cent annualised, which is already high.

The more important change is this: from 1 July 2025, GIC incurred on tax debts is no longer tax deductible. Historically, a business carrying an ATO debt could at least claim the interest as a deduction. That offset is gone. Carrying ATO debt now costs the full headline rate, which makes a payment plan with a bank or even a short-term business loan potentially cheaper than financing through the ATO.

Shortfall interest charge (SIC), which applies when an assessment is amended upward, is also no longer deductible from 1 July 2025.

Director penalty notices

For companies, unpaid PAYG withholding, GST, and super guarantee can trigger a director penalty notice (DPN). A DPN can make directors personally liable for the company's tax debt. If PAYG, GST, or super is reported but unpaid within three months of the due date, the ATO can issue a lockdown DPN that cannot be avoided by placing the company into liquidation. This is one of the most serious compliance failures a company director can face, and it's entirely preventable by reporting and paying on time, or by engaging early if cash flow can't cover the amount.

What to do if you're behind

• Bring bookkeeping and payroll records up to date so you know the real position.
• Lodge before paying, always. Lodging stops the FTL penalty clock even if the debt is unpaid.
• Contact the ATO or your agent early. Payment arrangements are available, but they require all lodgements to be up to date first.
• Pay what you can immediately to reduce the GIC base.
• Fix the underlying process that caused the miss, not just the symptom.

Getting help before small errors compound

Tax compliance isn't complicated in isolation. It becomes complicated when several obligations overlap, records lag behind trading activity, and a missed super payment turns into an SGC statement, a failed BAS payment, and a director penalty notice over eighteen months. The cheapest intervention is the earliest one.

Wiseman Accountants works with small businesses, sole traders, and company directors across Ipswich and South East Queensland on GST registration, BAS lodgement, payroll and super compliance, Queensland payroll tax, and ATO correspondence. If your lodgements are behind, you're unsure about an ATO letter, or you want a clean compliance calendar in place before the next BAS falls due, get in touch.