Sole Trader Tax Calculator Australia

For the current 2026-27 financial year, on a taxable income of $80,000, you will pay approximately $14,520 in basic income tax plus a $1,600 Medicare levy (2%). After applying the automatic $1,000 Small Business Tax Offset, your final tax liability will be roughly $15,120. This means you should set aside around $291 per week. In the previous FY 2025-26, the tax on the same amount was $15,388 due to the higher 16% rate on the lower bracket.

Yes, sole traders are taxed at the exact same resident individual marginal tax rates as employees. The key difference is that employers automatically withhold tax (PAYG withholding) from an employee's wage, whereas sole traders receive their gross earnings and must calculate and set aside their own tax. Use the calculator above to find your weekly set-aside target.

The tax-free threshold for the 2026-27 financial year is $18,200. This means the first $18,200 you earn as a sole trader is completely tax-free. Any income earned above this threshold will be taxed starting at the 15% rate.

Typically, sole traders pay tax quarterly or annually. If your tax bill at the end of the year is more than $4,000, the ATO will usually enrol you in the Pay As You Go (PAYG) instalment system. They will send you quarterly activity statements, allowing you to pay your tax in four manageable chunks throughout the year rather than a single lump sum.

Yes. While making super contributions for yourself is voluntary as a sole trader, any personal contributions you make into a complying super fund are tax-deductible up to the annual concessional cap ($30,000 for FY 2026-27). This reduces your taxable income, lowering your overall tax bill. You can calculate your super details using our superannuation calculator.

It is an automatic tax discount for sole traders and partners who have an aggregated turnover of less than $5 million. The offset is calculated at 16% of the basic income tax payable on your business profit, up to a maximum cap of $1,000. The ATO applies this discount automatically when you declare business income on your tax return.

Yes. Most Australian tax residents, including sole traders, must pay the 2% Medicare levy in addition to their regular income tax. It is calculated as 2% of your taxable income (net profit). For instance, on $80,000 taxable income, the Medicare levy is $1,600.

A sole trader is taxed at individual rates (0% to 45%), while a small business company pays a flat company tax rate of 25%. However, setting up and running a company involves higher regulatory costs, and taking profits out of a company still requires paying individual tax on wages or dividends. For most sole traders earning under $150,000, the sole trader structure remains highly efficient, especially with the Small Business Tax Offset.

If you lodge late or miss a payment, the ATO will apply the General Interest Charge (GIC) on the unpaid balance, which is calculated daily and compounds. For late lodgments, they may also issue a Failure to Lodge penalty. If you are experiencing financial difficulties, it is best to contact the ATO early to set up an interest-free or low-interest payment plan.

You can lodge your return online through myTax via myGov, or hire a registered tax agent. The deadline is 31 October if you self-lodge, but if you use a tax agent, they can usually extend your lodgment deadline to March or May of the following year.

No. "Sole trader" describes your business structure (you operate the business as an individual). An ABN (Australian Business Number) is a unique 11-digit identifier issued by the government to represent your business. You must have an ABN to run a business as a sole trader.

Only if you are registered for GST. You must register if your gross business turnover (excluding GST) is $75,000 or more per year. If registered, you must add 10% GST to your invoices and lodge a Business Activity Statement (BAS) regularly.

Yes, but only the portion used for business. You can claim expenses using the logbook method (keeping a logbook for 12 weeks to determine business-use percentage) or the cents-per-km method (which allows a claim of 85 cents per km for FY 2026-27, capped at 5,000 km per year).

A good rule of thumb is to put aside 25% to 30% of your net profit. If your business earns $95,000 with $15,000 in expenses, your taxable income is $80,000, meaning you should set aside $291 per week. Transferring this amount weekly to a separate savings account helps you avoid a tax bill surprise.

PAYG instalments are regular prepayments toward your expected annual tax bill. After you lodge your first sole trader tax return with a tax liability, the ATO will calculate quarterly instalments based on your previous year's income. These instalments are credited against your final tax bill at the end of the financial year.