Lodging your first company tax return can feel overwhelming, but it doesn't have to.
This guide covers the practical steps every new Australian company should take before lodging their first tax return. By getting organised early, you'll save time, avoid common mistakes, and make life much easier for your accountant.
If you're new to company tax, you may also be interested in our Company Income Tax Guide, which explains how everything works in simple terms.
Before anything else, make sure you can access your company's ATO Online Services. The ATO provides step-by-step instructions to help you set this up.
Your online account allows you to:
Don't assume everyone has the same tax return deadline. Your due date depends on your circumstances, so it's worth checking early rather than leaving it until the last minute.
Before your accountant can prepare your company tax return, your records should be complete and up to date.
Make sure you have:
The cleaner your bookkeeping, the faster and cheaper your tax return is likely to be.
A good accountant is worth their weight in gold. They do much more than prepare a tax return once a year.
Look for someone who:
The right accountant becomes a trusted adviser rather than simply another business expense.
For more tips, read our guide: How to Choose a Good Accountant for Your Small Business.
Here are some of the most commonly overlooked items for first-time company owners.
Many startup expenses may be deductible, including certain legal fees, accounting costs and company registration expenses. More information can be found in this ATO website.
Money you contribute to and withdraw from your company should be recorded correctly.
For example:
Keeping these transactions separate helps avoid accounting issues and potential tax complications later. For more details, read our guide: Taking Money Out of Your Company: What You Need to Know
If your company operates from home, some expenses, such as internet, phone and office equipment, may be deductible.
Your accountant can help determine which expenses are claimable and how they should be treated. For more tips, read our guide: Small Business Home Office Deductions in Australia
Eligible businesses may be able to immediately deduct certain business assets rather than claiming depreciation over several years.
The rules and thresholds change from time to time, so check the current eligibility requirements before relying on this concession. For more tax incentives, read our guide: Government Grants, Startup Funding and Tax Incentives for Small Business in Australia
Assets that don't qualify for an immediate deduction may still count as depreciated under the simplified small business depreciation rules.
If you sell products, make sure your stock records are accurate on 30 June. Your closing stock value affects your taxable income.
Not every business expense is tax deductible. Some common examples include:
If your company spends more than it earns in its first year, it'll make a tax loss instead of paying company tax.
The good news? That loss usually isn't wasted. In many cases, you can carry it forward and use it to reduce your company's taxable income in a future year when the business is profitable.
If your company is profitable and pays company tax, it starts building up franking credits. These can be attached to dividends you pay yourself in the future.
Franking credits stop the same profits being taxed twice – once when your company earns them, and again when you receive them as a shareholder.
Here's how it works: after your company pays tax on its profits, it can pay you a dividend and attach a franking credit. That credit represents the company tax that's already been paid.
When you lodge your personal tax return, you include both the dividend and the franking credit. The credit is then used to reduce the tax you owe on that income, so you're not paying tax on the same profits all over again.
Many companies are surprised to receive a PAYG instalment notice after lodging their first tax return.
This simply means the ATO expects your business to continue earning profits and asks you to pay tax progressively throughout the year instead of in one lump sum.
Although it's a normal part of running a growing business, it's worth planning for the cash flow impact. Read our guide: PAYG Instalments Explained.
If your company receives a tax bill that you can't pay immediately, don't ignore it.
The ATO may allow you to:
Keep in mind that interest may apply to overdue amounts, so it's usually best to contact the ATO or your accountant as early as possible if you're experiencing cash flow difficulties.
Your first company tax return isn't about knowing every tax rule – it's about getting the fundamentals right.
Keeping accurate records, staying on top of your bookkeeping and seeking advice when needed will make each future tax year much smoother.
A little preparation now can save you time, money and unnecessary stress later.
ANNA +Taxes is available for newly registered companies – first 1,000 customers get 6 months free. We auto-categorise your transactions and take care of your lodgements.
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