Running a small business in Australia comes with enormous rewards — and an equally significant administrative responsibility at tax time. With the financial year closing on 30 June, small business owners across the country need to get their records straight, understand the concessions available to them, and ensure they meet every lodgement obligation on time. The good news is that Australian tax law provides some genuinely powerful tax concessions for small business — concessions that can significantly reduce your tax bill if you know how to use them.
Who Qualifies as a “Small Business”?
The ATO defines a small business entity as one with an aggregated annual turnover of less than $10 million. This turnover threshold determines eligibility for a broad range of concessions and simplified tax rules. Your aggregated turnover includes not just your own business’s turnover, but also the turnover of any entities that are your affiliates or connected with you — so it is worth understanding how this is calculated, particularly if you have related entities.
Sole traders, partnerships, companies, and trusts can all qualify as small business entities, and the tax treatment differs across each structure.
The $20,000 Instant Asset Write-Off — Use It Before It Expires
One of the most important concessions available to small businesses in 2025–26 is the $20,000 instant asset write-off. For the 2025–26 income year, businesses with an aggregated annual turnover of less than $10 million using the simplified depreciation rules can immediately deduct the full business portion of the cost of any eligible asset costing less than $20,000 — provided the asset is first used or installed ready for use between 1 July 2025 and 30 June 2026.
The $20,000 limit applies on a per-asset basis, meaning you can purchase and write off multiple assets throughout the year — each one independently qualifying for the immediate deduction so long as each individual asset costs less than $20,000. Both new and second-hand assets can qualify, though some exclusions apply and a car cost limit of $69,674 applies for the 2025–26 income year.
This is a “use it or lose it” concession — the $20,000 threshold applies specifically to the 2025–26 year and assets must be in use or installed ready for use by 30 June 2026. If you have been contemplating purchasing equipment, technology, tools, or machinery, the weeks before 30 June are the time to act. This measure has been confirmed under the Treasury Laws Amendment (Tax Incentives and Integrity) Act 2025.
Other Tax Concessions for Eligible Small Businesses
The instant asset write-off is not the only concession available. Small business entities using the simplified depreciation rules can also pool assets costing $20,000 or more into a general small business pool, depreciating them at 15% in the first year and 30% each subsequent year. If the pool balance falls below $20,000 at the end of the income year, the entire remaining balance can be written off immediately.
The small business income tax offset (also known as the unincorporated small business tax offset) provides a reduction of up to $1,000 per year for sole traders and individuals with income from a partnership or trust that qualifies as a small business entity. The offset is calculated as 16% of the tax attributable to your business income, capped at $1,000 — and it applies automatically when you lodge your return.
Small business CGT concessions are also available when you sell a business asset. There are four main concessions — the 15-year exemption, the 50% active asset reduction, the retirement exemption, and the rollover concession — and they can be used in combination in certain circumstances. To access them, your business must generally have an aggregated turnover of less than $2 million or satisfy the maximum net asset value test of $6 million. These concessions can potentially eliminate or dramatically reduce capital gains tax when you sell a business.
BAS, PAYG, and Superannuation — Staying Compliant Throughout the Year
Tax compliance for small businesses does not begin and end at 30 June — it is a year-round responsibility. Businesses registered for GST must lodge Business Activity Statements (BAS) either monthly or quarterly, reporting GST collected and paid, and PAYG withholding for employees. Staying on top of BAS lodgements is essential; late lodgements and missed payments attract interest charges and penalties from the ATO.
Superannuation is another critical obligation. As an employer, you must pay super for eligible employees by the quarterly due dates — contributions paid late are not tax deductible and attract a Superannuation Guarantee Charge. This is an area the ATO monitors closely.
If your business uses Single Touch Payroll (STP), your payroll information is already being reported to the ATO in real time each pay day. This makes it even more important that your payroll is accurate and compliant, as the ATO has immediate visibility of your obligations.
Record Keeping — Your First Line of Defence
Good record keeping is not just a legal requirement; it is the foundation of a good tax outcome. The ATO requires businesses to retain records for five years from the date of the transaction, or five years from when you lodge your return, whichever is later. Digital records stored in the cloud are perfectly acceptable and often preferable for accessibility.
At a minimum, you should have complete records of all income received, all business expenses (with receipts or invoices), motor vehicle usage logs if you are claiming car expenses, bank statements, and any asset purchases or disposals. If your records are disorganised or incomplete, not only do you risk missing legitimate deductions — you are also poorly placed to respond to an ATO audit.
The Value of Getting Professional Advice
With so many concessions, thresholds, and lodgement obligations to keep across, small business tax is genuinely complex. The cost of getting it wrong — through missed deductions, incorrect GST reporting, or late super payments — can far outweigh the cost of professional accounting support.
At JR Corporate Accountants, we specialise in helping small business owners stay compliant, maximise their legitimate concessions, and plan ahead. From bookkeeping and BAS lodgements to end-of-year tax planning, we take the weight off your shoulders so you can focus on running and growing your business.
Book your free consultation with JR Corporate Accountants before 30 June and make this your most tax-efficient financial year yet.
This article contains general information only and is based on ATO guidance current as at June 2025. Please seek professional advice for your specific circumstances. Source: Australian Taxation Office (ato.gov.au)