If a new company starts now it does not have to pay any tax until the end of this financial year and depending on the when the tax return is lodged, it may not have to pay tax for another 11 months after the end of the financial year.
This seems like a tax holiday for almost 2 years, but inevitably the tax will need to be paid. If the company is profitable in its first year in 2012, in May 2013 the company will need to pay 100% of its tax for 2012. Two months later, the June activity statement will require another 25% of the 2012 tax amount to be paid as the initial instalment for 2013.
We advise clients to put aside around 30% of their profit for tax. This is especially important in the first year of operations as expanding businesses are often cash poor and if the ATO aren’t asking for quarterly instalments it is easy to divert tax funds to somewhere else.