What type of tax returns need to be lodged?
An individual tax return needs to be lodged each year if you operate as a sole trader business structure.
Sole traders are required to pay income tax at individual tax rates. This means that after claiming a deduction for all allowable expenses, you include all your business income with any other income and report it on your individual tax return using a separate business schedule – you do not need to lodge a separate return for your business.
The individual tax rates change from time to time, so it’s important to be aware of the current income year rate for the period you’re reporting.
A company tax return needs to be lodged each year if you operate as a company business structure.
Companies have to lodge an annual company tax return which shows:
- the company's income
- the income tax it is liable to pay.
The company itself is a separate legal entity and must lodge its own tax return and pay tax on its income. If you are a director, you will still need to lodge your own personal return as an individual, and if there is an associated trust, the trust must also lodge a separate tax return. You may also need to lodge a fringe benefits tax (FBT) return as a director, if you receive fringe benefits.
If you run a private company that makes tax-free distributions to shareholders or shareholders' associates in the form of payments, loans or debts forgiven, you have to adhere to Division 7A
- Watch the ATO’s video Working out your income tax: tax basics for small business to find out the difference in calculating tax for a sole trader and a company.