ATO Compliance Checklist for Australian Small Businesses 2025–26

Quick Answer

Australian small businesses in 2025–26 must lodge BAS on time, withhold PAYG from employees, pay super at 12% of ordinary time earnings, and — from 1 July 2026 — pay super on every payday under the new Payday Super rules. Missing any of these triggers ATO penalties, a Super Guarantee Charge, or director liability. Use this checklist to confirm you have every obligation covered before 30 June 2026.

1. ABN, Tax File Number, and Business Registration

Every business operating in Australia needs an Australian Business Number (ABN) before it issues its first invoice. Without an ABN, the ATO requires payers to withhold 47% of any payment made to you — the top marginal rate — under the no-ABN withholding rules in the Tax Administration Act 1953. Apply through the Australian Business Register (abr.gov.au); registration is free and typically processed within 24 hours for straightforward applications.

If you are operating as a company rather than a sole trader, you also need an Australian Company Number (ACN) from ASIC and a separate Tax File Number (TFN) for the company. Trusts and partnerships each need their own TFN. Operating without the correct registrations does not make income non-taxable — it just makes compliance harder and exposes you to back-dated penalties.

Business name registration is handled by ASIC at $42 for one year or $98 for three years (2025–26 fees). If you trade under your own legal name, registration is not required. If you use any other name, it is. Check your ASIC registration expiry date now — an expired business name can trigger automatic deregistration and ABN cancellation.

2. GST Registration and BAS Lodgement Deadlines

Goods and Services Tax (GST) registration is compulsory once your business turnover reaches $75,000 in any 12-month period, or $150,000 for non-profit organisations (A New Tax System (Goods and Services Tax) Act 1999). Ride-share and taxi drivers must register regardless of turnover. Once registered, you must charge 10% GST on taxable supplies, lodge a Business Activity Statement (BAS), and remit the net GST to the ATO on the due dates.

For most small businesses, BAS is lodged quarterly. The 2025–26 quarter four BAS — covering April, May, June 2026 — is due 28 July 2026 if you lodge yourself, or 25 August 2026 if you lodge through a registered BAS agent. Monthly lodgers with turnover above $20 million have a 21-day rule after month end. Missing a BAS due date triggers a Failure to Lodge (FTL) penalty: currently one penalty unit ($330 in 2025–26) per 28 days late, up to a maximum of five units ($1,650). The ATO compounds this with general interest charges on any unpaid amount.

The ATO's cash accounting method is available to businesses with an aggregated turnover under $10 million — you account for GST only when money actually changes hands, which is simpler for cash-flow management. The accruals method is required above that threshold. Whichever method you use, your invoices must meet the tax invoice requirements: supplier ABN, date, description of supply, and the GST amount or a statement that the price includes GST.

3. PAYG Withholding Obligations for Employers

If you employ staff or engage workers classified as employees under the Fair Work Act 2009, you are required to register for Pay As You Go (PAYG) withholding and deduct tax from every payment of salary or wages. The withholding amount is calculated using the ATO's tax withheld calculator or the Schedule 1 tax tables, updated each financial year. For 2025–26, the tax-free threshold remains at $18,200, and the low income tax offset (LITO) provides up to $700 in relief for incomes under $37,500.

Payments to contractors are generally not subject to PAYG withholding — but the contractor-versus-employee distinction is a known ATO audit trigger. The ATO's multi-factor test considers behavioural control, financial control, and the type of relationship. Getting this wrong means back-paying withholding, super, and entitlements, plus penalties. If you have any workers on long-term contracts doing work integral to your business, review their classification before 30 June.

Under Single Touch Payroll (STP) Phase 2, which has applied to all employers since 1 January 2023, every pay event must be reported to the ATO on or before the payroll payment date. There is no longer an option to catch up at year end. STP reporting also means your employees' income statements in myGov are pre-filled automatically — but only if your STP data is accurate. Errors in STP reports require an update event to be lodged; they do not self-correct.

4. Superannuation Guarantee — Rate, Deadlines, and the July 1 Payday Super Change

The Superannuation Guarantee (SG) rate for 2025–26 is 11.5% of ordinary time earnings (OTE). This rate was legislated to increase to 12% on 1 July 2025 under the Superannuation Guarantee (Administration) Act 1992, and it has remained at 12% for the 2025–26 year. OTE includes base salary, commission, shift loadings, and over-award payments — but not overtime-only payments. Minimum earnings threshold: employees who earn less than $450 per month from a single employer were exempt before 1 July 2022; that threshold was removed and super is now payable from the first dollar of earnings.

Currently, super must be paid at least quarterly: by 28 October, 28 January, 28 April, and 28 July each year. The Q4 2025–26 super payment — for the quarter ending 30 June 2026 — must clear your employees' super funds by 28 July 2026. 'Clear' means received and allocated by the fund, not merely sent. ATO guidance states you should allow 3–5 business days for processing, meaning you need to initiate the payment by approximately 21–23 July 2026 at the latest.

From 1 July 2026 — nine days away — everything changes. Under the Payday Super reform, employers must pay super on the same day as wages, or within a maximum of 7 days of the payroll date. Late or missed payments trigger the new Super Guarantee Charge (SGC), which includes the SG shortfall, a 10% interest penalty, an administration fee of $20 per employee per quarter, and ATO costs. Directors of companies can be made personally liable under the Director Penalty Notice (DPN) regime from the day the SGC assessment is raised — there is no 21-day grace period for super charges as there is for some other ATO debts.

5. Payroll Tax, WorkCover, and State-Based Obligations

Payroll tax is a state and territory tax — not an ATO obligation — but it catches many small business owners off guard. Each state has its own threshold and rate. In Victoria (SRO), the 2025–26 threshold is $900,000 in annual Australian wages; the rate is 4.85% (or 1.2125% for regional employers). In New South Wales, the threshold is $1.2 million; the rate is 5.45%. If your total Australian wages — including contractor payments that meet the relevant definitions — exceed your state's threshold, you must register and pay payroll tax monthly.

WorkCover (workers compensation insurance) is compulsory in every state and territory once you employ workers. Thresholds and premium structures vary. In Victoria, you must register if your annual rateable remuneration exceeds $7,500. Premium rates are industry-specific and set by WorkSafe Victoria. Operating without WorkCover when required exposes you to prosecution and leaves employees without cover for workplace injuries.

If you have employees in multiple states, each state's payroll tax grouping provisions may apply — the wages are grouped across entities that are 'connected', even if they trade under different names. Get advice from a registered tax agent if you are approaching any state threshold, because the penalties for late registration are significant: Victoria's SRO charges 10% per annum interest on unpaid payroll tax plus monthly lodgement penalties.

6. Record-Keeping, Income Tax Returns, and ATO Audit Triggers

The Tax Administration Act 1953 requires businesses to keep records that explain all transactions and are in English, for a minimum of five years from the date of lodgement of the relevant return. This includes: all invoices and receipts, bank statements, payroll records, super payment receipts, BAS workpapers, and records of any asset purchases or disposals. Digital records are acceptable — but they must be accessible, readable, and backed up.

Income tax return due dates for 2025–26: individuals (including sole traders) must lodge by 31 October 2026 if self-lodging, or by 15 May 2027 if lodging through a registered tax agent. Companies and trusts have the same dates unless specifically notified otherwise. The Instant Asset Write-Off threshold for 2025–26 is $20,000 per eligible asset for businesses with aggregated turnover under $10 million — this is confirmed in the 2025–26 Budget and applies to assets first used or installed ready for use by 30 June 2026.

The ATO's data-matching program now cross-references income reported in BAS, STP, and income tax returns against bank data, share registries, property title records, and online marketplace data (including Airbnb, Uber, and Airtasker). The most common audit triggers for small businesses in 2025–26 include: low reported income relative to lifestyle, large deductions as a percentage of income, inconsistent GST and income figures across BAS and the tax return, and super not paid on the correct OTE base. SAB Account AI generates audit-ready records by keeping a full data trail behind every invoice, payslip, and super calculation.

SAB Account AI (sabaccountai.com) automates your BAS calculations, PAYG withholding, and Payday Super tracking — try it free before your first July payroll hits.

SAB Account AI — ATO-compliant invoicing and payslips for Australian small businesses. From $9/mo.

What ATO registrations does a small business need in Australia?

At minimum, you need an ABN (free, via abr.gov.au). If turnover exceeds $75,000, you must also register for GST. Employers must register for PAYG withholding and, if paying wages, enrol for Single Touch Payroll before the first payroll.

When is the BAS due for the June 2026 quarter?

The Q4 2025–26 BAS covering April–June 2026 is due 28 July 2026 if you self-lodge, or 25 August 2026 if lodging through a registered BAS agent.

What is the super guarantee rate for 2025–26?

The Superannuation Guarantee rate is 12% of ordinary time earnings for 2025–26, as set under the Superannuation Guarantee (Administration) Act 1992.

What is Payday Super and when does it start?

Payday Super is a reform requiring employers to pay super within 7 days of each payroll, replacing the current quarterly system. It starts 1 July 2026 — nine days from the date of this post.

What happens if I miss a super payment to employees?

You become liable for the Super Guarantee Charge, which includes the SG shortfall, 10% interest, and a $20 administration fee per employee per quarter. Company directors can also receive a Director Penalty Notice making them personally liable.

How long do I need to keep business records in Australia?

The Tax Administration Act 1953 requires business records to be kept for a minimum of 5 years from the date of lodgement of the relevant tax return, in English, and in a readable format.

Do sole traders need to pay payroll tax in Australia?

Sole traders with no employees do not pay payroll tax. Payroll tax only applies once your total Australian wages — including contractor payments in some states — exceed your state's threshold, which ranges from $900,000 (VIC) to $1,300,000 (QLD).

What is the instant asset write-off threshold for 2025–26?

The instant asset write-off threshold is $20,000 per eligible asset for businesses with aggregated turnover under $10 million. The asset must be first used or installed ready for use by 30 June 2026.

Related: Bas Due Dates Australia 2026 · Payday Super 2026 · Payg Withholding Calculator Australia · Super Guarantee Rate Australia 2025 · Single Touch Payroll Small Business Australia · Payroll Tax Australia 2026