The most common EOFY tax questions, answered

Although the end of the financial year (EOFY) has passed, confusion around tax time often carries on well into the new financial year for small businesses and workers.

Tish Bhagwandeen, a QuickBooks accountant and founder of Infinance Solutions, has offered some much-needed clarity for small businesses and workers on their tax queries as the new financial year kicks off.

According to Google search data, Australian SMB owners search the web for answers, highlighting the ongoing knowledge gaps and lack of understanding around the lead-up to and post-30 June.

Bhagwandeen takes the most commonly asked EOFY tax questions and offers that much-needed clarity that Aussie SMBs need moving forward.

1. What are the new tax changes for 2025?

(37,990 monthly Google searches in Australia.)

“One of the biggest questions on SMB owners’ minds this year is how the federal government’s Stage 3 tax cuts will affect them. While changes won’t begin until 1 July 2026, it’s worth planning ahead,” said Bhagwandeen.

Key confirmed changes:

• From 1 July 2026, the 16 per cent tax rate drops to 15 per cent.

• From 1 July 2027, it drops again to 14 per cent.

• The $20,000 instant asset write-off has also been extended for eligible businesses with a turnover under $10 million.

“These cuts are designed to ease the cost of living and help address bracket creep.”

2. What can I claim as a business tax deduction?

(4,230 monthly Google searches in Australia)

“You can generally claim a tax deduction for most expenses you incur while running your business, as long as they are directly related to earning your assessable income,” said Bhagwandeen.

“Assessable income refers to the income you earn that is subject to tax. This includes revenue from sales, fees for services, interest income, and other earnings from your business activities.”

You cannot claim a deduction for:

• Private or personal expenses (e.g. groceries, clothes for personal wear).

• Entertainment costs (e.g. client lunches or staff parties, with limited exceptions).

• Fines or penalties (e.g. parking tickets).

3. How much tax does a small business pay?

(2,430 monthly Google searches in Australia)

“You will be a small business entity if you’re an individual, partnership, company or trust that is carrying on a business and has an aggregated turnover of less than $10 million,” said Bhagwandeen.

“Your business structure determines your tax rate.”

• Sole traders: Taxed at prevailing marginal rates. The marginal rate of tax refers to the percentage of tax you pay on each additional dollar of income you earn within a specific income bracket. This means your income is taxed in tiers or brackets, and as your income increases, the rate of tax applied to each extra dollar increases.

• Partnerships: Partnerships themselves are not taxed as separate entities. Instead, the income (or loss) of a partnership is passed through to the individual partners, who are then taxed personally on their share of the net income. As an example:

  • If a partnership earns $100,000 profit and there are two equal partners:

    • Each partner will declare $50,000 as income on their personal tax return.

    • Each partner will then pay tax on their share based on their own marginal tax rate.

• Trusts: Trusts are not taxed as separate taxable entities in the same way companies are. Instead, the tax treatment of a trust depends on who receives (or is entitled to) the trust income.

  • If a trust distributes income to beneficiaries, the beneficiaries are taxed on their share of the net trust income, not the trust itself. Beneficiaries include this income in their personal tax return. They pay tax at their own marginal tax rate. This includes adult individuals, companies, or even other trusts.

  • If the trust does not distribute all of its income (i.e. has undistributed income). The trustee is taxed on that amount at the highest marginal tax rate (currently 45 per cent) plus Medicare levy. This is designed to discourage income accumulation in trusts without distributing it.

• Small business companies: Small businesses are taxed as separate legal entities, meaning the company itself pays tax on its taxable income, not the owners or shareholders directly (unless profits are distributed). The tax rate of 25 per cent applies to base rate entities, which are typically most small businesses.

4. How do I do my business tax return in Australia?

(2,110 monthly Google searches in Australia)

“If you are an individual / sole trader business and you are confident in preparing and lodging your own tax return, you can do so via MyGov,” said Bhagwandeen.

“For other types of entities, you will either need to lodge via a standard business reporting-enabled software or lodge paper returns, although paper returns can be quite complex and there is a high risk of manual errors.”

It is recommended that you use the services of a registered tax agent to prepare and lodge your return for the following reasons

• Ensure your return is accurate and compliant.
• Help you maximise deductions and increase your refund.
• Offer extended lodgment deadlines.
• Handle ATO communications and disputes for you.
• Provide expert support for complex tax situations.
• Give you peace of mind and reduce the risk of errors, penalties, or audits.
• Overall, a tax agent can save you time, reduce stress, and improve your tax outcome.

5. Do businesses have to pay taxes?

(1,810 monthly Google searches in Australia)

“In Australia, businesses must pay tax if they have taxable income, which is the profit left after deducting allowable business expenses from assessable income.

“Taxable income = assessable income (e.g. sales, interest) – allowable deductions (e.g. rent, wages),” said Bhagwandeen.

Who pays tax:

• Sole traders and partnerships: taxed at the owner’s personal tax rate.

• Companies: taxed separately, typically at 25 per cent for small businesses.

• Trusts: usually don’t pay tax directly; beneficiaries are taxed on their share.

“If a business has no taxable income (e.g. due to a loss), it may not owe tax and may carry the loss forward to offset future income,” said Bhagwandeen.

6. When is business tax time?

(1,200 monthly Google searches in Australia)

“The Australian financial year runs from 1 July to 30 June. The end of this period marks the start of tax time, [when] businesses prepare and lodge their income tax returns.

“Lodging without a tax agent? Deadline = 31 October of the same calendar year.

“With a tax agent? You may qualify for an extension to 15 May the following year (if registered before 31 October and lodgement history is up to date),” said Bhagwandeen.

7. How do I get or find my business Tax File Number?

(640 monthly Google searches in Australia)

Your TFN can be found via:

• The Business Portal accessed via Relationship Authorisation Manager (RAM) for companies, trusts, etc.

• The MyGov Portal for individuals.

• Or by contacting the Australian Taxation Office directly.

8. How do I lodge my business tax return?

(530 monthly Google searches in Australia)

It’s always advised to utilise the services of a registered tax agent to lodge your tax return. If you do not use a tax agent, then:

• If you are an individual/ sole trader – you can lodge your return on the MyGov Portal.

• If you are a partnership/ trust / company – you can lodge a paper return and post this return to the ATO, or you can lodge using a standard business reporting software.

9. How long do I need to keep business tax records in Australia?

(480 monthly Google searches in Australia)

Five years, that’s the minimum time you must keep business records that:

• Explain your transactions.

• Are in writing (digital or paper).

• Are in English or easily translated.

• Failing to do so may result in financial penalties or be required to complete a record-keeping course (or both).