Sole Trader or Company: What are the Tax Differences?

You may be starting out in business and trying to decide whether to become a sole trader or to set up a company. Alternatively, you may already be an established sole trader and considering switching to become a company. Tax considerations are vital in deciding which of the two business structures is most suitable for you.

The first practical difference is in relation to your tax return. As a sole trader, you simply add your business income and expenses to a separate business and professional items schedule in your individual tax return that you lodge each year. For a company, there’s a separate annual tax return, and tax to pay on the company’s income. Companies are subject to annual reviews by the Australian Securities and Investments Commission (ASIC), so financial records must clearly show transactions and the company’s financial position, and allow clear statements to be created and audited if necessary. A number of strict legal and other obligations need to be met.

Tax returns for a company must clearly list the income, deductions and the liable income tax of the company. Also, directors and any employees of a company must lodge their own individual tax returns.

There’s no tax-free threshold for companies – they simply pay tax on the amount they earn. This is at either the 25% or 30% company tax rate. To be eligible for the lower company tax rate of 25%, the company needs to meet strict requirements to be a base rate entity. One of the tests is that your company’s aggregated turnover for the relevant income year must be less than the aggregated threshold for that year – which since 1 July 2018 has been $50 million a year. For all companies that are not eligible for the lower company tax rate, the full company tax rate of 30% will apply. However, for sole traders, whose tax is assessed as part of the individual’s personal income, $18,200 is the tax-free threshold.

Both sole traders and companies can:

• Register for goods and services tax (GST) if your GST turnover is $75,000 or more, or you’d like to claim fuel tax credits; and regardless of your turnover, you must register for GST if you provide taxi, limousine or ride-sourcing services; and

• Employ people, and if the business’s gross wages exceed the threshold set by your state or territory, then you will have to pay payroll tax.

Both types of business also need to pay capital gains tax (CGT) if a capital gain has been made, but sole traders may be able to reduce this gain by what are known as the discount and indexation methods. The latter may also be used by some companies.

Please contact our office if you have any questions . T: 03) 5571 0111 E: reception@coggergurry.com.au or make an online enquiry www.coggergurry.com .au/coggergurry_contact_us

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EOFY Check-In: Cars, Cashflow & Key Tax Moves

By Brentnalls Western Victoria • April 20, 2026

EOFY Check-In: Cars, Cashflow & Key Tax Moves Logbook check-in: Are you still compliant? Many people assume their car logbook is “set and forget” for five years, but that’s not always the case. A logbook is only valid if your work-related travel patterns haven’t changed. You may need a new logbook if: You’ve changed jobs You’ve moved home or workplace Your work travel patterns have changed Important reminders: If you have multiple vehicles, you need a separate logbook for each If you buy a new car, you can rely on your previous logbook, but only if you formally nominate this before lodging your return If your employer provides your car (or via a novated lease), you generally can’t claim car expenses Electric and hybrid vehicles: Using the ATO shortcut rate for home electricity used to charge your vehicle (5.47c/km from 1 April 2026) means you can’t also claim charging costs from your electricity bills. Plug-in hybrids require a specific calculation method Bottom line: If your circumstances have changed, your logbook may no longer be accurate and that can impact your claim. EOFY tax planning: What to focus on now To keep this practical and not overwhelming, here are the key opportunities to review before 30 June: 1. Super contributions Must be received by the fund before 30 June to claim a deduction Concessional cap is $30,000 (2025–26) Consider carry-forward contributions if eligible 2. Prepay and bring forward expenses Small businesses may be able to prepay expenses and claim now Bringing forward planned purchases (e.g. equipment under $20,000) can accelerate deductions 3. Review stock and assets Write down or write off obsolete or slow-moving stock Remove scrapped assets from your depreciation schedule 4. Clean up your books Write off bad debts before 30 June Ensure trust distributions or dividends are properly documented 5. Plan ahead Consider timing of income, expenses and capital gains Review cashflow for upcoming tax payments Look at opportunities to vary tax instalments if needed EOFY isn’t just about ticking boxes, it’s about making sure your claims are accurate and your tax position is working for you, not against you. If your situation has changed this year (work, home, business or vehicles), it’s the perfect time to review. Need help? We’re here to make sure everything is set up correctly before 30 June.

Giving Back to the Communities that Support Us

By Brentnalls Western Victoria • April 16, 2026

Giving Back to the Communities That Support Us At Brentnalls Western Victoria, giving back isn’t something we do occasionally, it’s part of who we are. We’re proud to work closely with individuals, families and businesses across our region, and we believe it’s important to support the communities that support us. Through our Workplace Giving initiative, our team has the opportunity to contribute to causes that are meaningful to them, often those connected to their own families, friends and local networks. What makes this initiative special is that it’s driven by our people. The causes we support aren’t chosen at a distance — they reflect real experiences, real stories, and real connections within our team. In our most recent round of contributions, we were proud to support a number of important organisations making a difference in very different ways. We made a donation to the Motor Neurone Disease Association of Australia , helping provide care, support and advocacy for individuals and families navigating the challenges of MND. We also supported the World’s Greatest Shave — a cause that was particularly close to home this year. Erin’s son, Xavier (pictured above) took part in the campaign and was truly “brave for the shave,” shaving his head to raise funds and awareness for those facing blood cancer. It’s a powerful reminder of how small acts of courage can make a meaningful impact. Our team also chose to support the Shaka Project , an organisation focused on strengthening youth mental health through connection, conversation and community. With growing awareness around mental health, particularly for young people, this is an area many of us feel strongly about. In addition, we contributed to the Royal Children’s Hospital Melbourne , helping support the incredible work they do in delivering world-class care to children and their families. While these contributions may seem small in isolation, together they reflect something much bigger - a shared commitment to looking beyond our day-to-day work and supporting the people and communities around us. At Brentnalls Western Victoria, we believe strong communities are built through connection, care and contribution. We’re proud to work alongside a team that not only cares about what they do, but also about the impact they can have.

Fuel cost pressures - ATO support now available

By Brentnalls Western Victoria • April 16, 2026

Fuel cost pressures – ATO support now available With fuel prices continuing to impact businesses across Australia, the Australian Taxation Office (ATO) has introduced a temporary support response to help manage the flow-on effect to cash flow and tax obligations. From 1 April 2026, targeted measures are available for businesses, individuals and not-for-profits experiencing genuine financial pressure due to rising fuel and transport costs. For many businesses, the impact isn’t just at the pump. It’s showing up in freight, suppliers and overall operating costs. The ATO has recognised this and is taking a more flexible, supportive approach during this period. What support is available? Depending on your circumstances, this may include: Flexible payment plans with extended timeframes and no upfront payment Remission of interest and penalties in certain situations The ability to vary PAYG instalments if your income has reduced A more considered compliance approach while conditions remain challenging These measures are designed to ease immediate cash flow pressure and help businesses stay on track while costs remain elevated. Don’t overlook fuel tax credits With fuel costs front of mind, it’s also a good time to revisit whether you’re correctly claiming fuel tax credits. Fuel tax credits allow eligible businesses to claim back some of the fuel tax included in the price of fuel used for business activities — particularly for off-road use such as machinery, equipment and generators. This is especially relevant for businesses in: Agriculture Transport and logistics Construction and earthmoving Manufacturing and other equipment-heavy industries The amount you can claim depends on how the fuel is used, and getting this right can make a meaningful difference to your overall fuel cost and cash flow. Timing matters: The ATO fuel response measures are currently temporary and available until 30 June 2026, so it’s important to act early if your business is affected. If you’d like help assessing your eligibility or ensuring you’re claiming everything correctly, please reach out to our team. Call us on 03 5571 0111