Tax can be complicated and it's not the only thing to consider when running a franchise business.
We know that most small businesses aim to do the right thing, including reporting their tax and super obligations accurately. We also know that sometimes small businesses can make mistakes.
The Australian Franchise Outlook 2026 by the Franchise Council of Australia shows that franchising generates $174 billion each year - powered by 90,000 small businesses, providing work for more than half a million Australians.
Establishing good business habits will not only give your franchise the best chance of success but can also give you peace of mind and free up your time.
When we see businesses operating well, the common theme is that they’re getting the basics right. You should consider:
- Using digital tools and business software to help you streamline processes, spend less time on administration, and concentrate on areas that will improve your cash flow position.
- Keeping good records ensuring you have the right information to meet your obligations, claim deductions, avoid mistakes, and better assess the financial health of your business.
- Getting advice from trusted sources, like a registered tax professional or the ATO website.
- Setting aside GST, pay as you go (PAYG) withholding and super from your cash flow, so you have the funds available when it’s time to lodge and pay.
Practicing good business habits will help you:
- manage your cash flow and meet your tax and super obligations
- accurately report business income in your tax return
- know which expenses you're entitled to claim, and separate your business and private expenses correctly
- lodge and pay your business activity statements (BAS) correctly and on time
- know what you need to record and report for tax incentives your business receives
- understand the tax implications of your business decisions such as taking money out of your business for your own use
- manage your tax and super obligations and prove your claims.
Report all your income
Income comes in many forms and it's essential to include everything in your tax return, including:
- income from sales (including cash)
- side hustles outside your main business activities
- non-cash payments and payments in-kind, such as goods or services received instead of money (e.g. swapping favours with other business owners)
- capital gains such as profits from selling business assets
If your franchise employs contractors, you may need to lodge a taxable payments annual report (TPAR) to report any payments you’ve made to contractors.
Find out more at ato.gov.au/businessincome
Claiming business expenses
You can claim a deduction for most expenses related to running your franchise, as long as they directly relate to earning your assessable income. Common deductible expenses include:
- operating costs
- tools and equipment
Keep in mind there are some expenses you can’t claim, such as private expenses, traffic fines, and expenses that relate to earning non-assessable income.
When claiming a deduction, it’s important to follow these three golden rules:
- The expense must have been for your business, available as an allowable deduction and not for private use.
- If the expense is for a mix of business and private use, you can only claim the portion that is used for your business.
- You must have records to prove it.
Find out more at ato.gov.au/businessdeductions
Payday Super
As a franchise business, its important you’re aware of the upcoming changes to superannuation next financial year. Payday Super is now law and will change how you calculate and when you pay your employees’ super guarantee. From 1 July 2026 you must pay your employees their super guarantee on payday, at the same time as their salary and wages.
Super guarantee is:
- calculated as 12% of an employee's qualifying earnings (QE), which is a new term that brings together ordinary time earnings (OTE) and other payments
- paid to an employees’ super fund on payday and received by the super fund within 7 business days (unless an extended timeframe applies, such as for new employees).
What you need to do:
- Plan ahead. Review your payroll systems and super processes and get ready to pay super guarantee more frequently.
- Stay informed. Keep checking these pages for updates or speak to your tax professional for advice.
You don’t need to wait until 1 July 2026 to start paying super at the same time as you pay salary and wages – you can start now.
You can also check out ato.gov.au/PaydaySuper to learn more about what's changing.
Help to lodge and pay
It's important to lodge and pay in full and on time, as it gives you certainty of your tax and super position and helps you avoid penalties and interest.
If you're worried you won't be able to lodge and pay by the due dates, contact your registered tax professional or contact the ATO before the due date to find out what options are available to you. We're committed to working with you to understand your situation and provide tailored help specific to your circumstances.
If you’re experiencing financial difficulties, you may be eligible to set up a payment plan. For debts of $200,000 or less, you may be able to set up a payment plan using our online services.
Payment plans require an up-front payment, and repayments should be completed within the shortest possible timeframe to help reduce interest charges that continue to accrue.
You can no longer claim interest charges incurred on or after 1 July 2025 as a tax deduction.
Support and tools to help you stay organised
We also offer a range of tools and resources to help small businesses stay on track:
- The ATO app includes the myDeductions tool to record expenses and income on the go if your franchise is structured as a sole trader.
- The Tax time toolkit for small business has useful information, tools and guides to support you to meet your tax and super obligations.
- Essentials to strengthen your small business offers free, self-paced learning on topics like record keeping and business deductions.
- Subscribe to our Small business newsletter for all the latest tax and super information that could affect your business.
If you want more detailed advice that’s relevant to you and your specific situation you can also speak with a registered tax professional.
Find out more at ato.gov.au/SBsupport
<Conclusion>
Franchising offers enormous potential, but success depends on getting the fundamentals right. Strong relationships, clear expectations, and ongoing support from franchisors are critical. Franchisees should focus on good business habits like accurate record keeping, planning for tax and super, and using digital tools to streamline their operations. Be proactive and prepare for changes like Payday Super, and you’ll position your franchise to thrive in a competitive market of over 90,000 small businesses.
Angela Allen is an Assistant Commissioner, Small Business, at the Australian Taxation Office. She is committed to supporting small business and continues to influence the end-to-end experience for small business taxpayers, prioritising education and transparency to help them get their obligations right from the start. Angela collaborates with other small business advocates, industry partners and government agencies to improve the small business experience. She is also passionate about investing in people, developing, and mentoring the leaders of tomorrow and inspiring others to reach their full potential.
