Question 8 - How Much Tax Do I Pay?

Well, it depends on your tax structure and obviously your business profit.

As a sole trader you pay tax at the rates prescribed for individuals. The marginal rates for individuals in 2022/23 are as follows:

The above rates do not include the medicare levy of 2%.

If you use a company structure, a flat rate of tax applies on the net profit which in the 2022/23 is 25% for a base rate entity.

For a superannuation fund, the tax rate is 15% of the net profit.

If you trade as a partnership only the partners pay tax in their own right and generally speaking, the beneficiaries of a trust pay tax in their own right.

Before you start a business it is very important that you seek professional advice. When choosing the most appropriate business structure you need to take into account issues like asset protection, income tax considerations, plans to admit new business partners and eligibility for discount capital gains tax concessions.

OTHER QUESTIONS IN THIS SERIES:

• What Steps are Involved in Starting a Business?
• Do I Have to Register for GST?
• What Tax Records Do I Need to Keep for My Business?
• What Is a Business Activity Statement?
• What’s the Difference Between an ABN and an ACN?
• Do I have to include GST on my Invoices?
• What Software do You Recommend for My Start-Up Business?
• Can I Claim my Motor Vehicle Expenses?
• What Do I Need to Do When I Employ My First employee?
• Whats The Most Appropriate Tax Structure For My Business?
• Are You Small Business Experts?
• How Much Do You Charge?
• How Do I Change Accountants?

• How Do PAYG Tax Instalments Work?