Tax

Small Business Tax Return Australia 2026: What You Must Lodge, Pay and Fix Before 31 October

15 June 2026 · 9 min read

Quick Answer

Most small businesses must lodge their 2025–26 tax return by 31 October 2026. If you use a registered tax agent, the deadline extends to 15 May 2027. The super guarantee rate is 12% from 1 July 2025, and Payday Super starts 1 July 2026 — both affect what you owe and how you report.

The 2025–26 financial year ends 30 June 2026. That means your small business tax return — covering every dollar of income, every deductible expense, and every super payment made between 1 July 2025 and 30 June 2026 — is now due. For most small businesses lodging through MyTax or their own account, the hard deadline is 31 October 2026.

This year has more compliance pressure than usual. The super guarantee rate increased to 12% on 1 July 2025, and Payday Super takes effect on 1 July 2026 — meaning from that date, super must be paid each payday rather than quarterly. If you are still running quarterly super accrual in your books, you are already one cycle behind the law. The ATO will cross-reference super fund data, payroll records, and your tax return. Gaps will show up.

This guide covers every step: what your tax return must include, which deductions apply to your business structure, how to handle super and PAYG correctly, and what records you need before you lodge. Whether you are a sole trader, a company, or a partnership, this is the practical checklist for getting your 2026 return right.

Tax Return Deadlines for Small Businesses in 2026

The lodgement deadline depends on two things: your business structure and whether you use a registered tax agent. Sole traders lodge their business income as part of their individual income tax return (ITR). Companies, partnerships, and trusts lodge separate returns. For all of these, the self-lodgement deadline is 31 October 2026 — that is the date the ATO receives your return, not the date you send it.

If you engage a registered tax agent before 31 October 2026, the deadline typically extends to 15 May 2027. This extension is not automatic — you must be on your agent's client list before the October deadline. If you missed a previous year's return or have a debt with the ATO, the extension may not apply. Check with your agent before assuming you have the extra time.

Late lodgement carries a Failure to Lodge (FTL) penalty. As of 2026, the penalty unit is $330. The ATO charges one penalty unit for every 28 days the return is late, up to a maximum of five units ($1,650). For small businesses already under cash flow pressure, this is a cost worth avoiding entirely.

If you have not lodged your 2024–25 return yet, do that first. Outstanding prior-year returns block your 2025–26 lodgement and flag your account for ATO review.

Key 2026 lodgement deadlines at a glance

31 October 2026 — self-lodgement deadline for sole traders, companies, partnerships, trusts
15 May 2027 — extended deadline if registered with a tax agent before 31 October
$330 per 28-day period late, up to $1,650 maximum FTL penalty
ATO may also charge interest on any tax debt unpaid after the due date

What Your Small Business Tax Return Must Include

Your tax return must capture total business income — that is every dollar received from customers, clients, or sales, including cash transactions, online payments, and marketplace income. If you use invoicing software, your total invoiced amount is not your income figure. The ATO wants cash-basis or accruals-basis income depending on your accounting method. Most small businesses under $10 million in aggregated turnover can use cash basis, which means you report income when you receive it, not when you invoice it.

Deductions must be directly related to earning income. The ATO groups deductions into categories: cost of goods sold, operating expenses (rent, utilities, subscriptions, software), motor vehicle expenses, depreciation, and home office costs. Each category has its own rules around what qualifies and how to calculate the amount. Mixing personal and business expenses is the most common audit trigger — keep them in separate accounts.

For the 2025–26 year, the Instant Asset Write-Off threshold applies to eligible depreciating assets first used or installed ready for use between 1 July 2024 and 30 June 2025. Check the ATO's current guidance for the threshold applicable to your aggregated turnover bracket, as this changes with each Budget. Assets over the threshold go into the general small business pool at a 15% first-year rate and 30% thereafter.

If your business turnover is under $10 million, you qualify as a Small Business Entity (SBE) and can access SBE tax concessions including simplified depreciation, trading stock rules, and prepayment deductions.

Items your tax return must account for

Total business income (cash or accruals basis)
Cost of goods sold if you carry stock
Employee wages, super contributions, and PAYG withholding
Operating expenses: software, insurance, accounting fees, rent
Motor vehicle expenses (logbook or cents-per-kilometre method)
Depreciation and asset write-offs
Home office expenses if applicable

Super Guarantee at 12%: What It Means for Your 2026 Return

The super guarantee rate increased to 12% on 1 July 2025. That rate applies to all ordinary time earnings paid from that date. For your 2025–26 tax return, the full year sits at 12% — there is no split rate to calculate across quarters. If your payroll records show contributions calculated at 11.5% for Q1 (July–September 2025), you have a shortfall. The ATO will match super fund data against your return.

Super contributions are only deductible in the year they are actually received by the super fund. Accruing super in your accounts but not paying it before 30 June 2026 means you cannot claim the deduction this year — it rolls to next year's return when you actually pay. For quarterly super payers, Q4 (April–June 2026) contributions must be received by the fund by 28 July 2026 to be deductible in 2025–26. Do not confuse the date you initiate the payment with the date the fund receives it — allow 3–5 business days for clearing.

From 1 July 2026, Payday Super requires super to be paid on or before each payday. This changes the deductibility timing entirely for FY2026–27 onwards. For the return you are lodging now (2025–26), quarterly super rules still applied for the full year. But if you have employees starting in July 2026, their first super payment under Payday Super rules must be made at the time of their first pay — not 28 days after quarter end.

Super contributions paid late are not deductible. They also attract the Superannuation Guarantee Charge (SGC), which is calculated on a broader earnings base than OTE and includes an interest component of 10% p.a. plus an administration fee. The SGC is not deductible either.

PAYG Withholding, BAS, and Reconciling Your Accounts

If you have employees, you must have been withholding PAYG tax from their wages all year and remitting it to the ATO via your Business Activity Statement (BAS). Your tax return must reconcile with those BAS lodgements. The total PAYG withheld across all BAS periods for the year must match the figure you report in your return and on employees' payment summaries — or rather, on Single Touch Payroll (STP) reports.

Single Touch Payroll is mandatory for all employers in Australia regardless of size. Each pay event is reported to the ATO in real time through your payroll software. At year end, you finalise your STP data in your software — this replaces the old payment summary process. Employees then see their income statement in myGov. You must finalise STP for the 2025–26 year by 14 July 2026. If you miss this date, employees cannot lodge their own tax returns until you do.

Your BAS also captures GST collected and paid if you are registered for GST. The figures on your final BAS for the year must align with your income and expense figures in your tax return. If your accountant spots a mismatch between GST-exclusive turnover on BAS and gross income on your return, it needs a reconciliation note. The ATO uses data-matching algorithms to flag these discrepancies before they even open your return.

STP finalisation is not the same as lodging your tax return. You must do both. Missing STP finalisation blocks your employees and attracts separate ATO follow-up.

PAYG and BAS reconciliation checklist

Finalise STP data by 14 July 2026 so employees can lodge their returns
Total PAYG withheld on BAS must match payroll records
GST turnover on BAS must reconcile with gross income in the return
Keep remittance receipts for all PAYG and GST payments as evidence

Deductions Sole Traders and Small Business Owners Commonly Miss

Bank fees and merchant fees are fully deductible if they relate to your business account or payment processing. Most sole traders claim these but forget to include fees charged by payment platforms like Square, Stripe, or PayPal — these are operating costs, not income reductions, and they belong in your deductions schedule.

Professional subscriptions, software licences, and SaaS tools used in running the business are deductible. This includes accounting software, invoicing platforms, project management tools, cloud storage, and any industry-specific tools. If the software has both personal and business use, you can only claim the business-use percentage. Keep a note of your rationale — the ATO expects you to be able to justify a split if asked.

Pre-paid expenses are deductible in the year of payment if the service period does not extend more than 12 months beyond 30 June 2026 and does not extend past 30 June 2027. This means renewing an annual software licence or paying an annual insurance premium in June 2026 is fully deductible in the 2025–26 return. For businesses needing to reduce taxable income before 30 June, prepaying eligible expenses is a legitimate and commonly used strategy — but execute it before end of financial year, not after.

Accounting fees for preparing your business tax return are themselves deductible — in the year you pay them. If you paid your accountant in August 2026 for the 2024–25 return, that cost goes in your 2025–26 return.

Deductions that are often overlooked

Merchant and payment processing fees (Stripe, Square, PayPal)
Business portion of phone and internet costs
Work-related subscriptions and software (invoicing, payroll, CRM tools)
Professional development, training, and industry memberships
Accountant and bookkeeper fees for the prior year's return
Prepaid annual expenses paid before 30 June 2026

Records You Must Keep and for How Long

The ATO requires you to keep all records that explain your income and deductions for five years from the date you lodge your return. For most 2025–26 returns lodged in October 2026, that means records until at least October 2031. The records must be in English (or translatable into English) and must be kept in a form that is legible — scanned PDFs and cloud storage are acceptable, but you need a reliable backup system.

For businesses with employees, payroll records have a separate retention requirement under the Fair Work Act: employee pay records, time and wage records, and leave records must be kept for seven years. This is longer than the ATO's five-year requirement. If you are using payroll software that auto-generates payslips and records hours, confirm that your data export function actually works before you ever need it — a software subscription lapsing is not a valid excuse for missing records.

Records you should have on hand before lodging: bank statements for all business accounts (including savings and credit), invoices issued and received, receipts for all deductions claimed, super payment receipts from each fund, PAYG withholding remittance receipts, BAS lodgements and payment confirmations, vehicle logbook if claiming motor vehicle costs, and STP reports from your payroll software. If you are missing any of these, locate them now — do not wait until your accountant asks.

Cloud accounting and payroll software keeps most of this automatically — but only if you have been using it consistently all year. If you have gaps in your records from months when you used spreadsheets or cash, reconstruct them now using bank statements.

Records to gather before lodging

ATO: 5 years from date of lodgement for income and deduction records
Fair Work Act: 7 years for employee pay, time, and leave records
Bank statements, supplier invoices, customer invoices — all required
Super payment receipts confirming the fund received the money (not just that you sent it)
STP finalisation report from payroll software
Vehicle logbook covering at least 12 continuous weeks if claiming car expenses

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Frequently asked questions

When is the small business tax return due in Australia for 2026?

The 2025–26 tax return is due 31 October 2026 if you lodge it yourself. If you use a registered tax agent and are on their client list before 31 October 2026, the deadline extends to 15 May 2027. Late lodgement attracts a $330 penalty per 28-day period.

What is the company tax rate for small businesses in Australia in 2026?

The base rate entity tax rate is 25% for companies with aggregated annual turnover under $50 million that derive at least 80% of their income from passive sources or trading income that is not base rate entity passive income. Sole traders pay tax at their marginal individual rate, which ranges from 0% to 45% plus the 2% Medicare levy.

Can I deduct super contributions on my 2026 tax return?

Yes, but only for contributions actually received by the super fund before 30 June 2026. Q4 contributions (April–June 2026) must clear the fund by 28 July 2026 to count as a 2025–26 deduction. Contributions paid late and subject to the SGC are not deductible.

Do I need to lodge a BAS as well as a tax return?

These are separate obligations. If you are registered for GST, you lodge BAS quarterly or monthly throughout the year to report GST and PAYG withholding. Your annual tax return then reconciles all of those figures into your final income and tax payable position. Both must be lodged — one does not replace the other.

How does Payday Super affect my 2026 tax return?

Payday Super does not start until 1 July 2026, so it does not change the rules for the 2025–26 return you are lodging now. However, from 1 July 2026 super must be paid each payday, which changes deductibility timing for FY2026–27 onwards. If you are paying July 2026 wages, those super payments are due at the time of payment — not 28 days after quarter end.