Understanding your tax obligations is crucial, and what you need to report and how you lodge your income tax return will depend on the structure of your business — whether you are a sole trader, partnership, trust, or company.
Sole Traders
If you operate your business as a sole trader, you must lodge a tax return even if your income is below the tax-free threshold. Your tax reporting includes:
- An individual tax return, including the supplementary section, and
- A Business and Professional Items Schedule for individuals
You need to report:
- Total business income
- Less allowable business deductions
- Net business profit or loss included in your personal tax return
Your business income is assessed at your individual marginal tax rates.
Partnerships and Partners
If you operate your business as a partnership:
- The partnership lodges a separate partnership tax return, reporting the net income (or loss) of the partnership.
- The partnership itself does not pay income tax — instead, income is distributed to partners.
As an individual partner, you must report in your personal tax return:
- Your share of the partnership’s net income or loss, and
- Any other assessable income from other sources.
Each partner is responsible for their share of tax based on their portion of the net income.
Trusts and Beneficiaries
If your business operates under a trust structure:
- The trustee lodges a trust tax return, reporting the net income or loss of the trust.
- The beneficiaries report the income they receive from the trust in their own tax returns.
As a trust beneficiary, you must include:
- Distributions received from the trust, and
- Any other assessable income in your individual return.
The trust may pay tax if income is not distributed, depending on the trust type and structure.
Companies
If your business is registered as a company, the company must lodge a company tax return each year. The company return includes:
- Taxable income and allowable deductions
- Tax offsets and credits
- PAYG instalments paid during the year
- Tax payable or refundable amount
Company income is separate from your personal income. The company pays tax on its profits at the applicable corporate tax rate.
Summary Table – Tax Return by Entity Type
| Business Entity Type | Who Lodges the Return | What’s Reported | Tax Paid By |
|---|---|---|---|
| Sole Trader | Individual | Business income, deductions, other personal income | Individual |
| Partnership | Partnership + Each Partner | Partnership net income + each partner’s share | Each Partner |
| Trust | Trust + Each Beneficiary | Trust net income + each beneficiary’s share | Beneficiaries or Trust |
| Company | Company | Company income, offsets, credits | Company |
Need Support Preparing Your Business Tax Return?
Whether you’re a sole trader or managing a complex trust or company, we can help ensure accurate lodgement, maximised deductions, and full compliance.