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 2015/16 are as follows:

Tax scale – after amendment currently before parliament
Taxable Income
Tax On This Income
0 to $18,200
 $18,201 to $37,000
19c for each $1 over $18,200
$37,001 to $80,000
$3,572 plus 32.5c for each $1 over $37,000
$80,001 to $180,000
$17,547 plus 37c for each $1 over $80,000
$180,001 and over
$54,547 plus 47c for each $1 over $180,000

If you use a company structure, a flat rate of tax applies on the net profit which in the 2014/15 year was 30% reduced down to 28.5% in the 2015/16 financial year.

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.