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Managing a Business

Beyond the Books: The 3 Key Numbers Every Australian Allied Health Practice Must Master in 2026

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Are You a Clinician or a CEO? (You Need to be Both) As an allied health professional in Australia (think physio, psychology, osteo, or speech pathology), your passion is patient care. But to ensure the long-term viability of your practice in a complex funding environment, you must also be a financial strategist. In 2026, a simple Profit & Loss report is not enough. Your bookkeeping needs to be accurate, but your focus must be on understanding your Key Performance Indicators (KPIs). These are the three essential numbers you must track, understand, and use to drive your practice’s success. 1. The Lifeblood: Provider Utilisation Rate Your most valuable resource is the time of your clinicians. The Utilisation Rate tells you how efficiently you are monetising that time.  Provider Utilisation Rate = Actual Billable Hours / Available Working Hours What it means: A high utilisation rate (e.g., above 75-80%) means your clinicians are spending most of their paid time in billable sessions, which drives revenue. A low rate signals wasted capacity. Bookkeeping Connection: Your payroll and rostering system must integrate seamlessly with your practice management software. Accurate tracking of non-billable time (e.g., admin, team meetings, professional development) is crucial to calculate Available Working Hours correctly. Actionable Insight: If your rate is low, investigate: Poor Scheduling: Are there too many gaps between appointments? Excessive Admin: Is a clinician spending too much time on admin tasks that an assistant could handle? Cancellations: Is your cancellation policy being consistently enforced and recorded? (See next point). 2. The Risk Indicator: Aged Receivables Unlike a retail business, allied health often has multiple, complex payers (Medicare, private health funds, NDIS, WorkCover, TAC, DVA, SWEP, private patients etc.). Aged Receivables is the money owed to your practice that hasn’t been paid. What it means: This KPI tracks how long your invoices remain unpaid and is the clearest indicator of your practice’s cash flow risk.2 It’s typically broken down into categories: Current (0-30 days), 30-60 days, 60-90 days, and 90+ days. Bookkeeping Connection: Your bookkeeping system (e.g., Xero or MYOB) must reconcile incoming payments from all sources back to the individual invoices/claims. Errors here are common when processing bulk payments from funding bodies. Actionable Insight: High 90+ Days Balance: This is a red flag. Implement a stricter collection process. This might require dedicated staff time to follow up with Plan Managers, WorkCover case managers, or insurance companies. Alternatively, should you be quoting before you are creating invoices and adding a patient to a debtors list? Invoicing Errors: Often, delays are caused by simple errors (wrong provider number, incorrect date, or missing client details) or missed claim opportunities due to a lack of reliable process. A quick review of your high-risk accounts will help you tighten your invoicing protocols. 3. The Sustainability Check: Wages-to-Revenue Ratio Staff costs are typically the largest expense for any allied health practice. This KPI helps you determine if your wages are sustainable relative to your revenue. Wages-to-Revenue Ratio = Total Wages & On-Costs (Inc. Super) / Total Revenue (Excl. GST) What it means: For a healthy, sustainable practice, this ratio typically sits between 45% and 55% of total revenue. If you are above 60%, your profitability is at severe risk. Bookkeeping Connection: This is where accurate payroll accounting is critical. Your Total Wages & On-Costs must include superannuation, annual leave entitlements, payroll tax (if applicable), and workers’ compensation insurance. The Payroll Tax Warning: In 2026, state-based payroll tax rules for medical and allied health practices are a major area of scrutiny. Revenue offices are increasingly reviewing contractor arrangements to see if they should be deemed employees for payroll tax purposes. Consult with a specialist accountant to ensure your financial structure and contracts minimise this significant compliance risk. The Takeaway: By moving beyond simply recording income and expenses, and instead focusing on these three core practice metrics, you transition from a reactive clinician to a proactive CEO, building a financially sound practice that can thrive in the Australian healthcare system. Read More: NDIS Bookkeeping: Why ‘Good Enough’ Isn’t Good Enough for Compliance

Accounting, GST, Managing a Business

Capital Gains Tax in Australia: How To Calculate Capital Gains Tax

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Capital gains tax (CGT) applies to the profit you make from the sale or disposal of property. Any sale or disposal of property can trigger what is known as a CGT event. If you sell a property for more than your purchase price, the difference is your capital gain, and this amount is subject to tax. At the end of the financial year, you can use this guide to help you prepare your tax return or to have an informed discussion with a tax advisor. We strongly recommend seeking professional guidance for your individual tax situation. CGT Property Not all property is subject to capital gains tax. The most common exemption is a family home. The Australian Taxation Office (ATO) maintains a list of properties that are subject to and exempt from CGT. Common examples of properties that can give rise to capital gains or losses include: Investment properties Shares Collectibles What Are Capital Gains And CGT? Capital gains are profits made on the sale of investments. For example, if you buy an investment property for $450,000 and sell it five years later for $520,000, your capital gain would be $70,000. The property you live in is usually exempt from CGT, as it is not considered an investment. Capital gains tax is a tax paid on profits from investments. It is important to note that CGT is not a separate tax. Instead, any capital gains are included in your regular income tax. These gains are added to your assessable income in the year you sell the property, just like the property. This means that your capital gains are taxed at your marginal tax rate, rather than a separate CGT rate. How Much Is Your Capital Gains Tax? Many factors affect your remaining CGT, including the length of ownership, your marginal tax rate and whether the transaction results in a profit. To calculate capital gains or losses, subtract the original purchase price and associated costs – such as stamp duty, conveyancing fees, valuation reports and building inspections – from the sale price. The result is your capital gain or loss. Length of ownership is important because if you have held the property for more than 12 months, you are eligible for a 50% CGT discount. If you have owned the property for less than 12 months, you pay full CGT on any gains. The Australian Taxation Office (ATO) levies this tax. It is advisable to consult an accountant to estimate your capital gains tax before selling an investment property. Read More: Moving Your NDIS Bookkeeping from Reactive to Proactive How Is The Capital Gains Tax Rate Calculated? CGT is triggered by a CGT ‘occurrence’. This usually happens when you sell an asset, but can also happen if the asset is gifted, destroyed, lost, or when you cease to be an Australian resident. CGT applies by taxing the increase in value from the time you acquired or created the asset. Capital gains are calculated in the year in which the contract for the sale of the asset is signed. If there is no contract, it is determined from the date the asset changes ownership. The taxable amount changes, but the resulting capital gain is included in your income and taxed at your applicable marginal rate. This additional amount to your assessable income is called the ‘net capital gain’. Your capital gain is calculated as follows: Step 1 Subtract the cost basis from the sale proceeds. The cost basis includes the purchase price of the property, any costs involved in buying or selling it and other incidental expenses. This gives the total capital gain. Step 2 Deduct any eligible capital losses. Step 3 Apply any applicable discounts. Resident individuals can claim a 50% discount, while superannuation fund holders get a 33 1/3% discount. The property must have been held for more than 12 months to qualify. Companies are not eligible for this discount. Step 4 The resulting figure after deductions and discounts is your net capital gain. Key Points The capital gains tax calculator helps you estimate the CGT liability for a property sold by taking into account the purchase cost, sale proceeds and taxable income. The CGT payable depends on the period of ownership, the type of entity and your marginal tax rate. You can manage CGT through exemptions, concessions or strategic planning, particularly for primary residences, but accurate record-keeping is essential. Given the complexity of the CGT rules, it is highly recommended to seek advice from a qualified tax professional. Further Reading: Sole Trader vs Limited Company in Australia: Key Differences & Which Is Better Frequently Asked Questions Q1. How much CGT will I pay? The CGT you pay depends on your property, your marginal tax rate and how much capital loss you can claim. Your marginal tax rate is important because it is the capital gains that are added to your assessable income in the financial year. Holding a property for more than 12 months allows eligible individuals to claim a 50% discount on capital gains. Q2. What is a CGT event? A CGT event occurs when you sell or transfer an asset, such as shares or investment property. It marks the point at which you make a capital gain or capital loss. Other events include the distribution of capital gains from managed funds. More details are available on the ATO website. Q3. What happens if I make a capital loss? A capital loss occurs when you sell an asset for less than its cost. You can only offset a capital loss against other capital gains; it cannot reduce tax on other types of income. Excess capital losses can usually be carried forward to offset gains in future years.

Accounting, Cash Flow Essentials, GST, Managing a Business, Uncategorized

Sole Trader vs Limited Company in Australia: Key Differences & Which Is Better

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Are you interested in the exchange? Choosing between a sole trader and a company structure can be overwhelming because each option has its own advantages and disadvantages. Every business has unique goals and financial priorities that influence the best choice. Many entrepreneurs start out as a sole trader because it is easier and cheaper. However, as their income grows and their tax liabilities increase, they often begin to reconsider whether switching to a company structure will provide better financial and legal benefits. The most important difference between the two structures is how taxes are applied, specifically the company tax rate. In this article, we will explore the key differences between operating as a sole trader and forming a company. Understanding these issues will help you decide which structure is best for your business’s current situation and long-term plans. What Is a Sole Trader? A sole trader is someone who independently owns and operates their business. They manage everything from day-to-day operations to strategic decision-making – giving them complete control and flexibility over how the business runs. This structure is straightforward and cost-effective, making it ideal for individuals starting out with a small business. However, it also carries more personal risk because there is no legal separation between the business and the owner. As a result, any debts, financial liabilities or legal issues that the business incurs are the personal responsibility of the owner. If the business suffers losses or is sued, the owner’s personal assets – such as their home, car or savings – can be used to pay off those debts. What Is a Pty Ltd Company? A Proprietorship Limited Company (Pty Ltd) is one of the most common business structures in Australia. It offers key advantages compared to running a business as a sole trader. In a Pty Ltd setup, the company is treated as a separate legal entity from the individuals who manage it. This means that it can enter into contracts, own property and even face legal action in its own name. The biggest advantage is that if the business owes money, the owners are not personally liable for those debts. Their personal belongings, such as their car, home or savings, remain safe. A Pty Ltd company offers stronger personal protection and tax savings opportunities than operating as a sole trader, although it involves higher costs and stricter regulations. Setting up this type of business requires registration fees, regular paperwork and compliance with legal obligations. Despite the additional costs, many business owners choose this model because it attracts investors and allows for long-term financial planning. You may also like: Capital Gains Tax in Australia: How To Calculate Capital Gains Tax Sole Proprietorship vs Company in Australia: Key Differences When starting a business, choosing the right structure is one of your first and most important steps. In Australia, the two most common options are operating as a sole proprietorship or registering as a company. Aspect Sole Trader Company (Pty Ltd) 1. Initial Setup Costs Setting up as a sole trader is simple and inexpensive. You don’t need an ACN or ASIC registration. Getting an ABN is free, and a separate bank account is optional though useful. Starting a company costs more — around $474–$597. You must register with ASIC and obtain an ACN. Opening a dedicated business bank account is required and may include maintenance fees. 2. Record-Keeping Requirements Managing records is easier with less compliance. You include business income in your personal tax return. Keep financial records for a minimum of five years. Update your business details within 28 days when changes occur. Record-keeping is more detailed and regulated. You must file a separate company tax return. Maintain tax documents for 5 years and financial records for 7 years. Companies must complete ASIC’s annual review and document major meetings. 3. Ease of Starting You can register quickly with just an ABN. A business name is needed only if you don’t use your personal name. Having a separate bank account is recommended for financial tracking. A company requires ACN registration with ASIC. You’ll also need an ABN and possibly a registered business name. A dedicated business account is mandatory. You must register for GST if turnover exceeds $75,000. 4. Business Revenue Handling All profits go directly to you as personal income. You can claim business expenses to reduce taxable income. Withdraw funds freely as personal drawings. The company owns the revenue, not individuals. Directors receive payments through salaries or dividends. The company files its own tax return. Company and personal funds must remain separate. 5. Setup & Operating Costs An ABN is free to obtain. Registering a business name costs $44 yearly or $102 for three years. You can use your personal bank account, though separate accounts are ideal. Name reservation costs around $61. Company registration ranges between $474–$576. A separate bank account is mandatory. Expect higher setup and ongoing compliance costs. 6. Liability for Business Debts You carry full personal liability for all business debts. Creditors may claim your personal assets like your car or house. Liability is limited to the company’s assets. Directors aren’t personally liable unless duties are breached. The company may liquidate assets to cover debts. 7. Control vs Liability You make every decision and have complete control. You also take on all financial and legal risks. Directors and shareholders share control. Company laws and governance rules must be followed. Personal assets are generally protected from company debts. 8. Taxation Business profits are taxed at your personal tax rate. The rate increases as your income grows. You report business income on your personal tax return. The company pays corporate tax at a fixed rate (25–30%). Directors and shareholders pay personal tax on income they receive. Can be more tax-efficient if profits are high. 9. Insurance Needs You must arrange your own insurance. Workers’ compensation isn’t automatic. Consider public liability and income protection coverage. Companies must provide workers’ compensation for staff. Directors can take additional coverage for liability protection. The company handles employee

GST, Managing a Business

Non-Commercial Losses: What Are & How to Defer Them? (A Guide)

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Running a business as a sole trader in Australia brings both excitement and challenges. A key hurdle that many business owners face is managing non-trading losses. These losses occur when a business activity – often not your main source of income – records a financial loss that you cannot immediately deduct from your other taxable income. The Australian Taxation Office (ATO) has strict rules on this, which is why it is important to know how you can defer such losses until your business becomes profitable. The non-trading loss rules exist to prevent individuals from offsetting losses from activities that do not have a genuine commercial purpose against income from other ventures or sources (refer to the ATO’s detailed guidance). The positive aspect is that if you operate as a sole trader, you can defer these losses and apply them to future years when your business makes a profit. What Are Non-Trading Losses? Non-commercial business losses occur when you, as a sole trader or partner, suffer a financial loss from a business activity that is not related to your primary source of income. To qualify, your activity must exhibit business-like characteristics and have a commercial purpose. These losses cannot be offset against other taxable income in the same year unless certain exceptions apply or the business makes a profit. If you cannot deduct your business losses in the current year, you can carry them forward and claim them once your business becomes profitable. This rule applies whether the losses are from an Australian or overseas source. Understanding The Non-Commercial Loss Rules According to the ATO, losses from activities that do not meet the requirements of a business cannot reduce your taxable income in the same year. Unless your business activity meets certain conditions, you must defer the losses and carry them forward to future years. This process is known as non-trading loss carryforward. These rules ensure that only activities carried out with the intention of generating a profit can claim an immediate loss deduction, which is not used solely as a tax offset. For many sole traders, understanding these rules is essential – not only to manage current tax liabilities but also to guide future business planning and growth strategies. Deferred Non-Commercial Losses If you are unable to claim your business losses in the current financial year, you may have the option to carry them forward for future use. When your business makes a profit in the next year, you can apply some or all of your deferred non-commercial losses against that profit up to the amount of the profit. You can also claim deferred losses against other income in a later year if: You meet the ATO’s non-commercial loss criteria, and The Commissioner allows you to apply the losses. Carry Losses Forward Indefinitely There is no set time limit on how long you can carry your losses forward. You can carry forward losses indefinitely as long as one of these conditions applies: Your business makes a profit, allowing you to offset the losses carried forward against those profits, You meet the conditions for non-commercial losses, or The Commissioner authorises the losses to be offset. Read Next: Company vs Trust: Which Business Structure is Right for You? Advantages And Challenges of Carrying Forward Non-Commercial Losses There are both advantages and disadvantages to carrying back non-commercial losses. On the positive side, it allows you to carry forward losses indefinitely until your business becomes profitable, providing potential tax relief in future years. This approach can be beneficial when your business generates enough profit to absorb those accumulated losses. However, it also poses some challenges. It can be difficult to meet the ATO’s strict requirements, and claims can be rejected if your business is not truly commercial. It is essential to keep detailed financial records and a clear, profit-focused business plan to demonstrate the purpose of your business. Additionally, if you receive income from other sources or have other tax losses, combining these with deferred non-business losses can complicate your tax situation. This makes regular tax planning and professional guidance important for proper compliance and management. Four Non-Business Loss Tests Meeting the income and business activity requirements alone does not automatically qualify you for non-business loss reimbursement. You must also meet at least one of the four non-business loss tests: Assessable Income Test: Your business must have earned at least $20,000 in assessable income, including gross earnings and capital gains. If your business has been in operation for less than a year, you can make a reasonable estimate of income for the entire year. Profit Test: If your business has been in operation for more than five years, it must have reported a profit in at least three of those years, including the current one. Real Estate Test: You meet this test if your business uses real estate worth $500,000 or more. This includes land, leasehold interests, and fixed buildings, but does not include private residences and fixtures owned by tenants. Other Asset Test: If you have at least $100,000 worth of business assets (excluding real estate and vehicles) that are used in your business on an ongoing basis, you are eligible. This may include plant and equipment, trademarks, inventory or leased assets. Key Points A non-trading loss is when your business incurs losses that cannot be immediately offset against other income. As a sole proprietor, you can defer these losses indefinitely until your business makes a profit. To use a deferred loss, you must either make a profit, comply with the non-trading loss rules, or seek the Commissioner’s discretion. Keeping accurate financial records, evaluating your business strategy and seeking advice from tax experts can help you optimise the management of deferred losses. Stay informed through government platforms such as the ATO and ASIC for current tax laws and compliance updates. Continue Reading: What Is The Tax Free Threshold in Australia: What You Should Know Frequently Asked Questions Q1. Who decides whether my business qualifies for deferred non-trading loss deductions? The Australian Taxation

Accounting, Cash Flow Essentials, GST, Managing a Business

ATO Directors’ Fees: What Are & How To Pay Them (Everything You Need to Know)

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Paying directors’ fees can often seem complicated, especially when you’re trying to get your business fully compliant with ATO requirements. Many business owners have similar concerns: should directors be paid? And if so, what’s the right way to handle those payments? It’s important to get this right because directors’ fees can be claimed as a tax deduction, helping you to reduce your business’s overall tax burden. However, paying directors’ fees isn’t as simple as just transferring money. There are a few steps you need to follow, and the ATO has specific tax rules for how to report and claim these fees. If you skip these steps, you could miss out on valuable deductions or run into compliance issues. In this guide, we’ll explain the rules around directors’ fees, how they should be paid, and the right way to claim them for your business. What Are Directors’ Fees? Before diving into the rules and procedures, it is important to understand how directors can receive payment. Typically, directors are compensated in one of the following ways: Salary Directors’ fees Dividends Each method rewards directors for their work but involves different tax implications and compliance requirements. Why Do Companies Pay Directors’ Fees? Companies pay directors’ fees to ensure that board members are appropriately compensated for their leadership, insight and strategic decision-making. This remuneration structure ensures transparent and balanced compensation for directors’ valuable input while providing flexibility in both financial management and tax planning. It also helps companies avoid the stringent rules of Section 7A of the Income Tax Assessment Act, which creates a more tax-efficient way for directors to earn income. Essentially, directors’ fees help align the company’s financial goals in a way that is consistent with and beneficial to the directors’ legitimate access to the company’s funds. How Are Directors’ Fees Structured And Paid Under Australian Law? Executive Directors In Australia, the structure of directors’ fees is based on the director’s level of involvement in the company. For executive directors involved in day-to-day business, fees are often paid in addition to their regular salary and must include mandatory superannuation contributions. This setup ensures fair compensation for both their executive duties and board responsibilities. Non-Executive Directors Non-executive or non-executive directors, who focus on strategic oversight rather than day-to-day management, usually receive only a director’s fee. However, these fees must also include superannuation contributions in accordance with the Superannuation Guarantee (SG) requirements set out in Australian law. All payments made to directors – whether executive or non-executive – must comply with corporate governance rules and Australian tax laws. This includes the correct calculation and payment of Pay As You Go (PAYG) withholding tax and reporting to the Australian Taxation Office (ATO) via Single Touch Payroll (STP). In addition, the company’s board must formally approve all director fees and record them in meeting minutes, ensuring that the remuneration is consistent with the company’s constitution and shareholder agreements. By following these rules, companies maintain transparency when remunerating their directors, meet legal obligations and adhere to strong corporate governance standards. Director Fees And Salaries: What’s The Difference? Many business owners often confuse director fees and director salaries or wages. It is important to understand this distinction because each is treated differently when it comes to taxes, legal obligations and retirement. Director Fees: These are payments made solely for their role as a director on the board. Directors may not have any other day-to-day work or management duties in the company. This is especially common for non-executive or independent directors who focus solely on governance, not performance. Director Salary or Wages: When a director also serves in an executive or operational position (such as CEO, managing director or other senior role), they receive a regular salary or wage for those duties. These payments are processed in the same way as any other employee’s salary. Sometimes, directors may receive both types of payments – a director’s fee for board work and a salary for management responsibilities. For example, a managing director in a private company often earns both. Always record these separately in your company’s accounts to keep things clear and consistent. Also Read: Sole Trader vs Limited Company in Australia: Key Differences & Which Is Better How Are Director Fees Determined? The process for determining director fees depends on the structure, size, composition of your company and whether it is privately held or publicly listed. Private And Small Companies: In small or private businesses, the board usually determines the amount and how it is paid. This may also be set out in the shareholders’ agreement or company constitution. Directors can set their own fees, provided they are consistent with these governing documents. Public Companies (e.g. ASX-listed): For listed companies, shareholders must approve the total pool of director fees during the AGM, as required by the Corporations Act and the company’s constitution. It is important to ensure that director remuneration is consistent with company policies, market standards and is clearly disclosed to shareholders (and sometimes the public). A transparent and consistent process helps prevent conflicts and supports long-term governance integrity. Formalising this framework in your constitution or shareholders’ agreement is not only best practice – it also protects your board from future disputes as the company expands or new directors join. How to Pay Director Fees: A Practical Guide When paying director fees – whether for yourself as a founder or for non-executive directors – it’s important to follow the correct legal and tax steps. Get Approval: Review your constitution or shareholders’ agreement to confirm the appropriate approval process. Then, pass the necessary board or shareholder resolutions. Set The Amount: Decide the amount of the fee and how often it will be paid. Process Through Payroll: All director fees should be passed through Payroll, even for owner-directors of the business. Register for PAYG withholding if not already done. Report to The ATO: Include director fees in your Single Touch Payroll (STP) reporting and issue an income statement or PAYG payment summary. Think About Superannuation: If super applies, make

Accounting, GST, Managing a Business

What Is The Tax Free Threshold in Australia: What You Should Know

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The tax-free threshold determines how much income you can earn in a financial year before you start paying tax. For Australian residents, the current tax-free threshold is $18,200, which means you don’t pay tax on the first $18,200 of your income. Any income earned above this limit is taxed at a progressive rate. This forms the basis of Australia’s progressive tax system, where higher income attracts higher tax rates. What Is The Tax-Free Threshold? If you are an Australian resident for tax purposes for the whole financial year, you will not pay any tax on the first $18,200 you earn. This amount is known as the tax-free threshold. Adjusted Tax-Free Threshold If you become an Australian resident for tax purposes during part of the financial year, your tax-free threshold will be adjusted accordingly. In this case, your threshold will be lower than the full amount available to residents for the whole year. Your adjusted tax-free limit is divided into two parts: A fixed base amount of $13,464 An additional $4,736, which is divided proportionally based on how many months you were in Australia during the income year, including any months you visited. The Australian income year runs from 1 July to 30 June of the following year. To calculate your adjusted limit, count the months from the date you became a resident to 30 June. How The Tax-Free Limit Works Australia operates a progressive tax system, which means that your tax rate increases as your income increases. The tax-free limit forms the starting point of this system. Here’s how it works: Any income over $18,200 is taxed at progressively higher rates. You pay no tax on your first $18,200 of income. For example, if you earn $30,000 in a year, the first $18,200 is tax-free, and you only have to pay tax on the remaining $11,800. This system ensures that people with lower incomes keep a larger share of their earnings, while those with higher incomes contribute a larger share of the country’s tax revenue. Eligibility For The Tax-Free Threshold To claim the full tax-free threshold you must be an Australian resident for tax purposes throughout the financial year. If you become or cease to be a resident during the year, you are eligible for a pro-rata tax-free threshold. For part-year residents, your threshold is calculated as follows: A flat amount of $13,464 Plus up to $4,736, adjusted for the number of months you were an Australian resident. This proportional system ensures that people who live in Australia for part of the year still receive a fair share of tax-free benefits. How to Claim Your income can come from one or more sources, such as an employer, a government agency, or work done under an Australian business number. If you are an Australian resident for tax purposes, you can claim the tax-free threshold each financial year. You can decide whether to claim the tax-free threshold on the Tax File Number (TFN) declaration you provide to your payer (including Centrelink). If you choose to claim it: Your payer will withhold tax when your income exceeds $18,200. You won’t pay tax on income up to $18,200 Find out what to do if you have multiple jobs or change jobs during the financial year. You may also like: Non-Commercial Losses: What Are & How to Defer Them? (A Guide) If You Are an Australian Resident For Part of The Year If you are an Australian resident for part of the financial year, you can claim the part-year tax-free threshold. The part-year tax-free threshold has two components: A flat rate of $13,464 An additional amount of up to $4,736, which is calculated pro-rata based on how many months you were in Australia during the financial year, including the months you were in. If you are a non-resident for the whole financial year, you cannot claim the tax-free threshold. This means you pay tax on all income you earn in Australia. Find out more about the tax-free threshold for newcomers to Australia. Your Income And The Tax-Free Threshold You can have income from multiple payers at the same time. Payers can include employers, government agencies, or work done as a sole trader. You can choose whether or not to claim the tax-free threshold ($18,200) on your earnings. If you claim the tax-free threshold: You won’t pay tax on income up to $18,200 Your payer will withhold tax when you earn more than $363 per week, $726 per fortnight, or $1,573 per month. When to Claim The Tax-Free Threshold If you have more than one payer, you usually claim the tax-free threshold from only one payer. Typically, you claim it from the payer that pays you the highest salary or wages. You can claim income from two or more payers if you: Have a second or multiple jobs Work part-time and also receive a taxable pension or government allowance Operate under an ABN as a contractor, sole trader or other business structure. Tax Is Withheld From All Sources of Your Income When you file your tax return, we review all earned income and the tax withheld. Sometimes, the total tax withheld may be different from your year-end tax liability if: Your income is $18,200 or less, so you can claim the tax-free limit If you had too little tax withheld, you may owe a balance. If you had too much tax withheld, you may get a refund Depending on your situation, you can request a change to the tax withheld from your income. This helps align it more closely with your year-end tax liability. Conclusion Understanding and claiming your tax-free allowance can have a big impact on your tax liabilities and the money you take home. By following the right steps and constantly reviewing your finances, you can avoid unexpected tax problems, maximize your take-home pay, and reduce the likelihood of paying a tax bill at the end of the year. For advice customized to your individual circumstances, consider consulting a registered tax agent or

GST, Managing a Business

How to Use a Weekly Tax Table for Your Business (2026 Guide)

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As a business owner in Australia, you’re already handling a lot of tasks, like managing staff, tracking accounts and keeping everything on schedule. A key part of running a business smoothly is knowing how the ATO weekly tax table works and how it affects your payroll. The weekly tax table is based on current income tax rates, which determine how much tax you have to withhold from an employee’s wages. Understanding this makes it easier to manage payments and comply with tax rules. The Australian Taxation Office (ATO) collects income tax from individuals each financial year. In Australia, the financial year starts on 1 July and ends on 30 June of the following year. Right now, we’re in the 2025-26 financial year, which runs from 1 July 2025 to 30 June 2026. Below you’ll find the income tax brackets and rates for Australian residents for this year and previous years. What Is a Tax Table? This tax table is a guide published by the ATO that shows how much income tax employers need to deduct from employees’ wages. They follow progressive tax rates for Australian residents, ranging from no tax on income up to $18,200 a year to 45% on income over $190,000. For small and medium-sized businesses, using these tables correctly can help avoid problems. If employers withhold too little, they could face penalties. If they withhold too much, it could reduce an employee’s cash flow. These tables cover regular payments such as salaries, wages, allowances and holiday loading. They do not apply to lump sum payments or contractor payments under voluntary agreements, which have their own rules. You can also use the ATO’s tax withholding calculator on their website to work out the correct amount. What Is The 2025 Weekly Tax Table? The Australian Taxation Office (ATO) issues weekly tax tables that show how much tax employers need to deduct from their staff’s weekly wages. The ATO also produces tax tables for other pay periods, including fortnightly and monthly payments. In addition, the ATO offers specific tax tables for different types of payments and employee situations. By using the right table, you can ensure that the correct amount is deducted from wages each pay period. The PAYG Withholding Tax Table guides employers in finding the right amount to deduct, helping businesses stay on track with their tax obligations. How To Use The Weekly Tax Table First, analyse your employee’s total weekly pay and taxable income. This includes any allowances, overtime or bonus amounts in addition to their normal wage. Next, check whether your employee has chosen a tax-free threshold. This is the part of their income that can be earned before any tax is applied. For the 2024-25 financial year, the tax-free threshold is $18,200. Then, use the weekly tax table to match your employee’s income and threshold choice so you can find the correct amount of tax to withhold. For example, if your employee earns $1,500 a week and claims the tax-free threshold, the ATO’s weekly tax table for 2024-25 shows that you should withhold $192 from their weekly pay. Weekly Earnings Tax-Free Threshold Claimed Tax Withheld $1,500 Yes $192 The weekly tax table is used for various payments, including parental leave and compensation. The ATO also provides separate tax tables for overseas residents and working holidaymakers. Read Next: MYOB vs QuickBooks vs Xero (Which One Is Better) 2026 Use This Tax Table This tax table is for payments made from 1 July 2024. Use this table if you make any of the following weekly payments: Directors’ fees Paid parental leave Salaries, wages, allowances and holiday loading for employees Payments to religious workers Payments to salaried workers Government education or training payments Salaries and allowances to public officials (such as members of parliament, statutory office holders, defence force personnel and police officers) Compensation, sickness or accident payments paid regularly because a person is unable to work (unless the payment is being made to the policyholder under an insurance policy) Also apply this table to payments made to overseas residents. If you make payments to shearers, horticultural workers, artists or workers employed on a daily or casual basis, a different tax table may apply. If you employ workers under a Working Holiday Maker visa, use Schedule 15 – Tax Table for Working Holiday Makers for all their payments, including any unit payments. Frequently Asked Questions Q1. What happens if I don’t withhold the correct amount of tax from my employees’ wages? If you don’t withhold the correct amount of tax from your employee’s wages, the ATO may levy penalties. This may include interest on the tax paid and administrative penalties for non-compliance. In some cases, the ATO may consider it intentional and impose criminal penalties. To avoid problems, use the correct tax table and calculate the cash correctly. If you make a mistake, contact the ATO quickly to correct it and reduce any penalties. Q2. What should I do if my employee’s circumstances change and affect their cash? If your employee’s circumstances change, such as starting or stopping at the tax-free threshold, you must adjust their withholding. The employee must complete a new Tax File Number (TFN Declaration) form with the updated details. Once you have received your new TFN declaration, calculate the correct withholding amount using the appropriate tax table. Keep a record of all TFN declarations and employee status updates. Q3. Can I use the same weekly tax table for all my employees? No. The weekly tax table depends on the employee’s circumstances, such as residence status and whether they claim the tax-free threshold. The ATO provides separate tables for: Residents not claiming the tax-free threshold Residents claiming the tax-free threshold Holidaymakers Foreign residents Use the correct table for each employee to ensure the correct tax withholding. Recommended To Read: Buying a Car Through Your Business Australia (A Complete Guide)

Managing a Business

Buying a Car Through Your Business Australia (A Complete Guide)

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Maximising your business vehicle tax deduction is an effective way for small business owners in Australia to manage their finances. Many owners believe that buying a car for work can reduce their tax bill, but the rules are not always straightforward. There are often misconceptions about how much can be claimed, which makes it important to get the right guidance. The Australian Taxation Office (ATO) updates its rules regularly, so you should work closely with your accountant to stay on track. In this guide, we break down the process in simple terms, providing clear tips on how small business owners can claim tax benefits when buying a car for business use. What Is a Business Car Loan? A business car loan helps you buy a vehicle for your company by borrowing money from a lender. Like other loans, you have to repay a certain amount in regular instalments, usually monthly, over a set period of time (known as the loan term). You can choose from a variety of business vehicle loans, such as a chattel mortgage, finance lease, or hire purchase. In this article, when we talk about business car loans, we mean a chattel mortgage (also called a goods loan), as it is the most common option used by businesses. Types of Motor Vehicle Deductions The ATO allows small business owners to claim tax deductions for motor vehicles used in business. Below is a general list of expenses you can claim as part of motor vehicle expenses: Petrol, fuel and oil Motor vehicle insurance premiums Interest on a car loan or lease Vehicle registration Repairs and servicing costs Depreciation (reduction in value) Lease payments Vehicle Depreciation: What You Need toKnow If you want to get the most out of your car loan tax deduction, you need to know which vehicle expenses you can claim as a business expense. Fuel and oil: You can claim work-related travel expenses, such as fuel and oil. Keep records of the miles you drive for business so you can support your claim and enjoy the savings. Depreciation: You can claim the depreciation of your business car as a tax deduction. This can significantly reduce your taxable income. Make sure you follow the Australian Taxation Office (ATO) rules carefully so that depreciation is calculated correctly. Insurance: Paying for vehicle insurance is more than just protection—it also qualifies as a deductible expense. Having insurance reduces the overall cost of using a business car. Repairs and maintenance: You can claim the cost of keeping your business car in good condition. Expenses like servicing, changing tires, and repairs count as tax deductions. Registration: You can also write off your car registration fees as a business expense. This tax deduction gives you another opportunity to save money for your company. Continue Reading: How to Use a Weekly Tax Table for Your Business (2026 Guide) Personal Vehicles And Tax Deductions Even if you buy a car in your own name for your small business, you can still claim a tax deduction for the miles and expenses you incur when using the vehicle for work. The easiest way to track both personal and business travel is to keep a logbook, which you can purchase from most newsagents. How you claim car expenses will depend on whether you operate as a sole trader, limited company, trust or partnership. Actual Costs Method This option uses receipts for all car expenses related to business travel. At the end of the financial year, you can claim the business portion of that expense. If you use the car for both work and personal travel, keep proper records. In such cases, multiply the total expense by the percentage of business use. Logbook Method When you use a logbook, you must write down details of each trip, including dates, start and end points, total kilometres and the reason for the journey. To find the business percentage, divide the business kilometres by the total kilometres travelled, then multiply by 100. You should also calculate all your car expenses for the financial year and apply your business usage percentage. Cents Per Kilometre This option requires you to multiply your total business kilometres for the year by the ATO rate. For 2022-23, the rate is 78 cents per kilometre. You can claim a maximum of 5,000 business kilometres per year using this method. FAQs Q1. What expenses can I claim for a business car? You can claim the costs of running a business car, including fuel, servicing, insurance, registration and interest on the car loan. You can also claim lease payments and depreciation. However, you can only claim the portion of expenses related to business use. Any personal or private use must be excluded. Q2. How do I calculate the percentage of business use of my car? To find out your percentage of business use, keep a logbook for at least 12 weeks. Record your odometer readings at the beginning and end of each business trip. Then, calculate the total kilometers driven for business as a percentage of your total kilometers during the logbook period. This percentage is used to estimate your claimable car expenses. Q3. What methods can I use to claim my business car expenses? There are two main methods: the logbook method and the cents-per-kilometre method. The logbook method allows you to claim actual car expenses based on a percentage of your business use. The cents-per-kilometre method allows claims up to 5,000 business kilometres per year at a fixed ATO rate. Companies and trusts can only use the actual expenses method. Recommended to Read: GST Exemptions in Australia: Key Benefits, Rules & Tax-Free Goods Guide

Managing a Business

How Long to Keep Financial Records in Australia (A Complete Guide)

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Records reflect the tax and super transactions made by your business. Your business records should have clear details so that we can see the purpose of each transaction and how it relates to your business income or expenses. Date, amount, description (for example: sale, purchase, salary, rent), and any Goods and Services Tax (GST) details for the transaction. 5 Essential Rules for Keeping Records 1. Keep all business-related records You must keep all records relating to every tax and super tax, including all records relating to the start, operation, change, sale or closure of your business. 2. Make records available on request You must be able to show us your records at any time. Keep details of your record-keeping system so that we can confirm that it meets legal requirements. 3. Maintain the accuracy of your records Do not alter your records with devices such as electronic sales suppression systems. Store them securely so that they cannot be altered or damaged. 4. Follow the 5-year retention period Keep most records for 5 years. This period starts from the date you created or acquired the record, or when the related transaction or action was completed – whichever is later. In some cases, the law sets a different starting point. 5. Keep records in English Your records should be in English or easily translated into English. Why Record Keeping Is Important Keeping proper records helps you: Monitor the health of your business and know whether you are making a profit or a loss. Avoid penalties for record-keeping errors. Make informed business decisions. Monitor cash flow so you can pay bills on time. Report tax, retirement and employer-related obligations, such as compensation, allowances or reports. Pay attention to your balances and outstanding balances. Show your financial status to lenders, buyers, tax agents or partners. If your business is audited, provide accurate information immediately. Income And Sales Transaction Records Bank statements and transaction records Business expense statements, including cash purchases Records of expenses related to assets or inventory Fuel tax credit documents if you claim the credit Employee and contractor information End-of-year documents, such as lists of creditors (those who owe you money) and debtors (those who owe you money) GST-related documents if you are registered for GST Use Digital Record Keeping You can store records digitally or on paper. The Australian Taxation Office (ATO) advises businesses to adopt digital recordkeeping where possible, as tax and superannuation reporting is increasingly moving online. Digital records streamline processes and save time once set up. If you choose digital records, you don’t need paper versions unless a regulation specifically requires them. Store Records Securely Protect both digital and paper records from alteration or loss. Always back up your digital files and, whenever possible, use secure off-site storage such as a cloud solution. Keep Financial Records Keeping clear and up-to-date financial records plays a vital role in the success of your business. Good record-keeping habits help you reduce losses, manage cash flow, meet tax, legal and regulatory obligations and improve financial understanding. An accountant can guide you in creating a reliable record-keeping system. Records Include: Keeping documents, whether digital or paper, that reflect the dates and amounts of transactions. Contracts, agreements and legal documents. Confidential customer and business data. You may need to obtain records during tax season, at the end of the financial year, or through authorities such as the Australian Taxation Office. Benefits of Effective Record Keeping When you keep accurate financial records, you can: Protect your business Organize and manage more effectively Monitor performance Increase profitability Manage risks with confidence Protect your business rights Back up business records Create valuable reports Comply with tax and legal standards Create a secure digital backup process to keep records safe and constantly updated. Back up important records daily for optimal protection. Read Also: What Is BAS & BAS Due Dates in Australia (2026 Guide) FAQs: Frequently Asked Questions Q1. How long do I have to keep customer identity records in Australia? Under the AML/CTF Act, you must keep customer identity records for seven years after you stop providing certain services to a customer. These requirements apply in addition to privacy laws and do not replace credit reporting obligations. Q2. Do I have to keep my bank statements for seven years? Yes, it is recommended. The ATO can request supporting records anytime between three and seven years after you file your tax return. For security reasons, store supporting documents for your return for at least seven years or longer. Q3. Can I safely dispose of old credit card statements? Yes, but destroy them safely. If possible, shred them. If you don’t trust them, tear them up by hand or cut them into small pieces. To prevent identity theft, make sure no one can get hold of them before you throw them away. Q4. How long should you keep financial records? If you request a credit or refund after filing a return, keep your records for 3 years from the date the original return was filed, plus the tax payment date, whichever is later.