Australian Tax & Compliance Framework
Australia's tax system is administered by the Australian Taxation Office (ATO), with the financial year running from 1 July to 30 June. Companies pay tax at 25% (base rate entities with turnover under $50 million) or 30% for larger entities. Individual taxpayers are subject to progressive rates from 0% to 45%, plus the Medicare levy (2%) and Medicare levy surcharge for high income earners without private health insurance.
Goods and Services Tax (GST) at 10% applies to most goods and services. Businesses with annual turnover exceeding $75,000 ($150,000 for non-profits) must register for GST and lodge Business Activity Statements (BAS) — quarterly for most entities or monthly for those with turnover exceeding $20 million. BAS includes GST collected, GST credits claimed, PAYG withholding from employee wages, and PAYG income tax instalments. PakalaTax reconciles all GST-coded transactions, ensures correct BAS categorisation, and lodges electronically through the ATO Business Portal.
Single Touch Payroll (STP) Phase 2 requires employers to report detailed payroll information to the ATO each pay cycle, including gross payments, PAYG withholding, superannuation, salary sacrifice, allowances (broken into categories like travel, uniform, tools), deductions, and leave balances. Superannuation Guarantee (currently 11.5%, rising to 12% from July 2025) must be paid quarterly through a compliant clearing house. Late super payments incur the Superannuation Guarantee Charge (SGC), which is non-deductible and includes an additional interest component.
For small businesses, the ATO offers various concessions including the instant asset write-off (currently $20,000 per asset), simplified depreciation pooling, and the small business income tax offset. Companies with international operations must comply with thin capitalisation rules, transfer pricing documentation, and Country-by-Country (CbC) reporting for groups with global income exceeding AUD $1 billion. Our Australian-qualified team ensures full compliance across all ATO obligations.