Sole Trader Tax Calculator Australia

Sole traders are taxed on their business profit (income minus expenses) at individual income tax rates. Business income is included in your personal tax return. You don't pay a separate 'business tax' like companies do.

Subtract deductible expenses from your business income to get net business profit, add any other income and subtract deductible super to get taxable income, then apply the ATO resident income tax brackets. Reduce the result by the Low Income Tax Offset and the Small Business Income Tax Offset, then add the Medicare levy and any study and training loan repayment. The calculator above does this for FY 2026-27, and for FY 2025-26 or FY 2024-25 if you are lodging a past return.

There is no fixed small business tax rate for a sole trader, you pay individual income tax on your net profit. For example, $80,000 of net business income in FY 2026-27 attracts about $15,120 of total tax (income tax of $14,520 less the $1,000 Small Business Income Tax Offset, plus the 2% Medicare levy of $1,600), an effective rate of roughly 19%. Higher profits are taxed at higher marginal rates. Enter your own numbers above for an estimate.

The Small Business Income Tax Offset (SBITO) provides a tax offset of up to $1,000 for sole traders with aggregated business turnover under $5 million. It is calculated as 16% of the share of your income tax payable that relates to your net small business income, capped at $1,000 per individual (and never more than your tax payable). The rate has been 16% since FY 2021-22. The calculator stops applying it once the turnover you enter reaches $5 million, but aggregated turnover also includes the turnover of entities connected or affiliated with you, which no calculator can see, so check your own aggregation before relying on the offset.

You must register for GST if your annual GST turnover is $75,000 or more (the not-for-profit threshold is $150,000). You must also register from day one, regardless of turnover, if you drive a taxi, limousine or ride-sourcing service (Uber, DiDi, Ola, etc.) or if you want to claim fuel tax credits. Once registered, you charge 10% GST on taxable sales, can claim GST credits on business purchases, and lodge a BAS, quarterly by default for turnovers under $20 million, monthly for $20 million or more, or annually if you voluntarily registered below the $75,000 threshold.

PAYG (Pay As You Go) instalments are pre-payments toward your expected end-of-year income tax bill. The ATO puts you into the instalment system once your business income reaches its threshold, then works out a quarterly amount or a rate from your most recent assessment, uplifted for expected income growth. Instalments are levied on instalment income, which is your business and investment income, not on salary your employer already withholds tax from. The figure above follows that shape: it is the tax on your whole taxable income less the tax attributable to the salary you entered, divided by four. It is a planning figure. The amount on your actual activity statement comes from the ATO, and you can vary it if your year is running differently.

Yes, and it is one of the few deductions you can still make after 30 June has passed in most other respects. Two conditions catch people out. First, the fund has to receive the money before 30 June, and you have to give the fund a valid notice of intent to claim a deduction (ITAA 1997 s 290-170) and get its written acknowledgement before you lodge your return or by 30 June of the following year, whichever is earlier. Miss the notice and the deduction is denied even though the money is in the fund. Second, the concessional cap is $32,500 for FY 2026-27, up from $30,000 in FY 2025-26, and it counts every concessional contribution, not just yours. Contributions above the cap are added back to your assessable income and taxed at your marginal rate, with a 15% offset for the contributions tax the fund already paid. The calculator applies both the cap and that offset.

Because a return has inputs this page does not ask for. The most common differences are the private health insurance rebate, capital gains, family or dependants Medicare thresholds instead of the single ones used here, reportable fringe benefits, net rental or investment losses, prior year losses carried forward, spouse and dependant offsets, foreign income, and the Division 35 non-commercial loss rules if your business ran at a loss. The page also assumes you were an Australian resident for the whole year and that no tax has been paid yet, so it shows a full year liability rather than a balance owing after credits. Treat it as a planning figure for setting money aside, and treat the return as the answer.

You pay tax on profit, not on the balance. A sole trader is not a separate legal entity, so there is no such thing as leaving profit in the business to defer tax the way a company can. Income is assessable when you earn it, which for most sole traders on an accruals basis means when you invoice, not when the client pays, so you can owe tax on an invoice that is still outstanding. Money you draw out for yourself is not a wage and is not deductible: drawings are just you moving your own money. The practical consequence is that the balance in the account is not yours to spend, and the per cycle table above is there so you can move the tax portion somewhere else as it comes in.

This calculator sets a loss to zero and shows you the amount it set aside, because whether you can use it depends on tests the page cannot see. Under the non-commercial loss rules in Division 35 of ITAA 1997 you can offset a business loss against your salary and other income in the same year only if your income for non-commercial loss purposes is under $250,000 and the business passes one of four tests: at least $20,000 of assessable income, a profit in three of the past five years, at least $500,000 of real property used in the business, or at least $100,000 of other assets. If you do not pass, the loss is deferred and waits for a future profit from the same activity. Either way the loss is not lost, it is a question of which year it lands in.

You will if your income for surcharge purposes is above the threshold and you had no eligible private hospital cover, and the surcharge is charged for the days you were uncovered. This page models the singles thresholds and rates for the year you select, on taxable income plus the personal super contributions you claimed, because reportable super contributions are added back for surcharge purposes. It does not model the family thresholds, which are higher and increase for each dependent child after the first, so a couple or a family will see a figure here that is too high. Extras or ambulance only cover does not count: it has to be hospital cover with an excess at or under the published limit.

The tax is right and the quarterly split is not. Income tax is assessed on the whole year, and the tax free threshold is not pro rated for a business that started in November, so entering the income you actually expect to earn between now and 30 June gives you the correct annual liability. What a part year breaks is the division into four: if you started in the third quarter there are only two instalment quarters left, so the same annual tax has to come out of two payments rather than four. In your first year you usually get no activity statement at all, because the ATO builds instalments from your last assessment and there is not one yet, which is exactly when a first year sole trader gets caught with a full year of tax due in one lump at lodgement.

Two reasons, and neither is an error in the arithmetic. The annual figure is the one the ATO assesses, and every other column is that figure divided by 52, 26, 12 or 4, then rounded to whole dollars for display, so multiplying a rounded weekly number back up lands a few dollars away. The bigger reason is the calendar: a year is 52.18 weeks, so roughly every eleventh year has 53 Thursdays and a weekly set aside of one 52nd is one week short. Tax brackets, offsets and the Medicare levy are all annual, not weekly, which is why the honest direction is always to work out the year and then divide, never to work out a week and multiply.

Common deductions include: home office expenses, vehicle expenses, tools and equipment, professional development, insurance, accounting fees, phone and internet, advertising, and depreciation of business assets.