Question 8 - How Much Tax Do I Pay?

Well, it depends on your tax structure and obviously your business profit.

As a sole trader you pay tax at the rates prescribed for individuals. The marginal rates for individuals in 2022/23 are as follows:

Tax scale – after amendment currently before parliament
Taxable Income
Tax On This Income
0 to $18,200
 $18,201 to $45,000 19c for each $1 over $18,200
$45,001-$120,000 $5,092 plus 32.5c for each $1 over $45,000
$120,001-$180,000 $29,467 plus 37c for each $1 over $120,000
$180,001 and over
$51,667 plus 45c for each $1 over $180,000

The above rates do not include the medicare levy of 2%.

If you use a company structure, a flat rate of tax applies on the net profit which in the 2022/23 is 25% for a base rate entity.

For a superannuation fund, the tax rate is 15% of the net profit.

If you trade as a partnership only the partners pay tax in their own right and generally speaking, the beneficiaries of a trust pay tax in their own right.

Before you start a business it is very important that you seek professional advice. When choosing the most appropriate business structure you need to take into account issues like asset protection, income tax considerations, plans to admit new business partners and eligibility for discount capital gains tax concessions.