Concepts
Financial year
In Australia the financial year runs from 1 July to 30 June, and it is the period used for individual income tax returns, most business income tax and many reporting obligations.
The Australian financial year runs for twelve months from 1 July to 30 June. It is named by the year in which it ends, so the financial year ending on 30 June 2026 is commonly called the 2025-26 or 2026 financial year. Most individuals, sole traders, partnerships and companies report their income tax on this basis, so it is the standard period against which tax records are organised.
For individuals, the financial year determines the income and deductions that go into the annual tax return. Wages, interest, dividends and business profit earned between 1 July and 30 June are generally assessed together, and tax rates and offsets that apply for that year are used. Because rates, thresholds and some concessions can change between years, always check the ATO website for the settings that apply to the year you are dealing with.
For GST, the financial year matters in several ways even though GST is reported through BAS periods. The BAS periods fall inside it, with the four quarters ending in September, December, March and June. Annual GST reporters and businesses that estimate annual figures also tend to think in financial year terms. Some tests, such as GST turnover and small business thresholds, look at a rolling twelve-month view rather than only the financial year, so the two need to be kept distinct.
Other obligations run on different cycles. The fringe benefits tax year runs from 1 April to 31 March. Some businesses have an approved substituted accounting period that differs from 30 June, for example a company with a balance date that suits its seasonal pattern. Payroll tax, workers compensation and other state matters can have their own reporting periods set by the relevant state or territory authority.
Practically, the end of June is a busy time. Businesses often review stock, write off bad debts, make asset purchases and check their records so the financial year is closed off cleanly. Employers also complete end-of-year payroll finalisation through their reporting system. Timing of income and expenses can matter, so cash and accrual treatment should be considered with an adviser, remembering that tax rules about when amounts count apply.
A common misunderstanding is mixing up the financial year with the calendar year, or assuming everything in tax follows 1 July to 30 June. In fact, GST periods, FBT and some international arrangements use different periods. Another is forgetting that a return for one financial year is usually lodged after it ends, in the following months. This is general information only, so confirm your own situation with the ATO or a registered tax professional.
Worked example
A sole trader earns $9,000 in net business income each month. Between 1 July 2025 and 30 June 2026 she earns $108,000 net, and that full year's figure goes into her 2025-26 tax return. Her GST is reported separately in four quarterly BAS statements, the last of which covers April to June and is due in the following month.
Practical tips
- Keep records organised by financial year so the return and your BAS figures can be reconciled easily.
- Remember the FBT year, running 1 April to 31 March, is a different period.
- Check the ATO website for the rates and thresholds that apply to the specific year, since they can change.