Building the habit that prevents the bill from becoming a crisis
The BAS lands. Or the tax bill does.
And somehow, despite a good month, the money to pay it isn't quite there.
This is one of the most common and most preventable sources of stress in small business — and it's fixed less by earning more, and more by setting money aside as you go, rather than discovering the obligation all at once.
The short answer
A workable starting rule of thumb is to set aside 25–30% of what you draw or earn for income tax, plus the GST you collect on sales (which was never really yours to begin with), and your superannuation guarantee if you're paying yourself as an employee through a company. The right figures for you depend on your structure and your actual tax position — but the habit of setting money aside regularly is what matters most.
The three things usually being set aside
| Obligation | Rough guide |
|---|---|
| Income tax | 25–30% of profit or salary is a common starting estimate, though your actual marginal rate depends on total income |
| GST | 100% of GST collected on sales — this was collected on the ATO's behalf, not earned income |
| Superannuation guarantee | 12% of qualifying earnings, if paying yourself a salary through a company |
Why a separate account changes everything
The single most effective habit here is moving the set-aside amount into a separate account the moment income arrives — not at the end of the month, not when the BAS shows up. Money that's physically separated stops being available to spend on anything else, which is what makes the difference between “we should save for tax” and actually having it there when the bill arrives.
A simple example
A sole trader invoices a client $11,000, including $1,000 GST. As soon as it's paid, $1,000 moves to a GST account immediately — it was never really business income. Of the remaining $10,000, roughly 27% — about $2,700 — moves to a tax account. What's left, around $7,300, is what's genuinely available for the business and for drawings.
Why the flat percentage is a starting point, not a promise
Actual income tax is calculated on total taxable income across the year, using marginal rates — not a flat percentage per transaction. A rough set-aside rate is a sensible buffer, but it can under- or overshoot your real liability, particularly if income is uneven through the year or you're close to a tax bracket threshold. Reviewing the estimate against an actual tax calculation periodically — not just relying on the rule of thumb indefinitely — keeps it accurate.
Adjusting the rate to your situation
Higher income generally means a higher marginal tax rate — the flat 25–30% starting point may need to be higher for a strongly profitable year.
If you're paying yourself through a company, PAYG withholding on your salary is calculated and withheld automatically — the set-aside habit matters most for GST and any dividends or additional drawings.
PAYG instalments, once the ATO starts requiring them, effectively force a version of this habit for you — but it's worth having your own buffer running before that happens.
A quick self-check
Do I have a separate account specifically for tax and GST set-asides?
Am I moving money into it as income arrives, or only when I remember?
Have I checked my set-aside percentage against an actual estimate of my tax position in the last year?
If a BAS or tax bill arrived tomorrow, is the money genuinely there?
When should you get professional help?
you want an accurate estimate of your actual tax position, rather than a flat rule of thumb;
your income is irregular or growing quickly and a fixed percentage no longer feels reliable;
you're setting up PAYG withholding or instalments for the first time; or
you've been caught short by a BAS or tax bill and want a system that prevents it recurring.
Continue learning
→ Understanding BAS — What Am I Actually Reporting and Paying?
→ GST Collected Isn't Really My Money — So How Should I Manage It?
→ What Happens If I Can't Pay My BAS or Tax on Time?
SKC Accounting | Knowledge Centre | Knowledge Guide 024
Last reviewed: August 2026
General information only. This guide does not take into account your individual circumstances and is not a substitute for professional accounting, taxation, legal or financial advice.