Sole Trader Tax Calculator

See the tax on your ABN income, the percentage to set aside from every payment, and the two things that blindside new sole traders.

A sole trader is not a separate entity for tax. Your business profit is added to your other income and taxed at ordinary individual rates, which means the maths is familiar. What is not familiar is that nobody withholds any of it for you. This calculator gives you the percentage to move aside from every payment that lands, flags the $75,000 GST threshold, and shows what PAYG instalments will look like once the ATO puts you in the system.

Your details

Business incomeWhat you invoiced this year, excluding any GST you collected

Business expensesEverything you can legitimately claim: tools, software, car, home office, insurance

Other incomeSalary from a job, interest, rent. Sole trader profit gets added on top of it.

Super contributionYou have no employer paying it for you, and it's deductible

Tax residency

I have private hospital coverI have a HECS-HELP debtNo employer withholding it, so it lands with your tax bill

Set aside from every dollar

20%

Net profit

$75,000

Total tax

$14,520

Left after tax

$60,480

How your sole trader tax bill is worked out
Business income	$95,000
Less expenses	$20,000
Net profit	$75,000
Income tax	$13,020
Medicare levy	$1,500
Total owing	$14,520

Nobody is withholding this for you

That is the whole difference between a sole trader and an employee. Put 20% of every payment into a separate account the day it lands and the bill stops being frightening. Your effective rate is 19.4% and your marginal rate is 32%, so the set-aside figure is deliberately rounded up to give you a buffer.

You need to be registered for GST

Your turnover is at or above $75,000, and the threshold is turnover, not profit, which is the part people get wrong. You add 10% to your invoices, hold it, and remit it through your BAS. It is not your money and it is not income, so keep it out of the set-aside above.

Expect PAYG instalments of roughly $3,630 a quarter

Once you have lodged a return with tax owing, the ATO puts you into the instalment system and you start prepaying next year's tax quarterly. It is not extra tax, it is the same tax earlier, but the first year it appears it can feel like paying twice, because you settle last year and prepay this year at the same time.

Sole trader profit is taxed at individual rates, not a separate business rate, so this uses the same brackets, Medicare levy and offsets as any other income. Revenue should be entered excluding GST if you are registered.

How to use this calculator

1. If you're registered for GST, the 10% you collect is not yours and is not income. Leave it out of this figure entirely.
2. Software, tools, insurance, the work-related share of your car and phone, home office. Underclaiming here costs you your marginal rate on every dollar you forgot.
3. Sole trader profit stacks on top of it, so a side business on a $90,000 salary is taxed very differently to the same business as your only income.
4. Move that share of every payment into a separate account the day it arrives. It is the single habit that makes the difference between a manageable bill and a crisis.

Sole traders pay individual tax rates

There is no separate business tax rate for a sole trader, and no company rate either. Your net profit, which is income minus deductible expenses, is added to everything else you earn and taxed on the same brackets as a salary: nil to $18,200, then 15% to $45,000, 30% to $135,000, 37% to $190,000 and 45% above, plus the 2% Medicare levy.

On $95,000 of income with $20,000 of expenses, your profit is $75,000 and the tax comes to $14,520, an effective rate of 19.4%. That is lower than most people expect, and it is why the panic about sole trader tax is usually misplaced. The problem is never the rate, it is that the money has to still be there when the bill arrives. If your business is growing, our comparison of sole trader versus company covers when a different structure starts to make sense.

Nobody is withholding this for you

As an employee, tax leaves before you ever see it, which is a genuine kindness disguised as an annoyance. As a sole trader, every invoice arrives whole and the tax on it is entirely your problem to remember, up to a year later.

The fix is mechanical. Open a second account, move the set-aside percentage across the day each payment lands, and never touch it. The calculator rounds that percentage up on purpose so there is a buffer, since it is far better to find spare money in June than to be short. Once you have done a full year, you will know your own number.

The $75,000 GST threshold is turnover, not profit

This is the most expensive misunderstanding in the whole area. GST registration becomes compulsory once your turnover reaches $75,000 in a twelve month period, and turnover means what you invoiced, before a single expense comes off. Bill $95,000 and spend $60,000 running the business, and you are well past the threshold despite a modest profit.

Once registered you add 10% to your invoices, hold it, and remit it through your BAS, while claiming back the GST on your own purchases. That collected GST is never your money, so keep it out of your set-aside calculation and ideally out of your spending account. Registering voluntarily below the threshold can be worth it if your clients are businesses and you have real expenses to claim credits on. Our GST calculator handles the adding and removing, and the registration threshold guide covers the edge cases.

PAYG instalments, and the year that feels like double tax

Once you lodge a return with a reasonable amount of tax owing, the ATO enters you into the PAYG instalment system and you start prepaying next year's tax in quarterly chunks. On $75,000 of profit that is roughly $3,630 a quarter.

It is not extra tax, it is the same tax paid earlier, which is genuinely easier once you are used to it. The brutal part is the transition year, when you settle last year's bill and start prepaying this year's at the same time. Plenty of profitable businesses have had their worst cash flow month precisely here, and it is entirely predictable, so plan for it the moment you lodge your first profitable return.

Deductions are worth your marginal rate, not their full value

Claiming a $1,000 expense does not save you $1,000, it stops $1,000 of profit being taxed, so it saves you your marginal rate. In the 30% bracket that is about $320 once the Medicare levy is counted. Real business expenses are always worth claiming, but buying something in June purely for the deduction still leaves you $680 poorer.

The genuine wins are the expenses you already have and forget to claim: the work-related share of your phone and internet, home office running costs, software subscriptions, professional insurance, accounting fees, and the business portion of your car. Our list of sole trader deductions goes through what actually qualifies.

Your super is entirely your problem

No employer means no super guarantee, and it is the quietest cost of working for yourself. Nothing forces you to contribute, so most sole traders do not, and the gap compounds silently for decades while the business feels like it is going well.

Personal contributions are deductible if you lodge a notice of intent to claim with your fund before you lodge your return, which means the tax system pays for a meaningful share of them. Enter a contribution in the calculator to see the saving. The super contribution calculator shows how it fits under the $32,500 cap, and super for the self-employed covers the paperwork.

FAQ

What tax rate does a sole trader pay in Australia?

Individual rates, the same as a salary. Your net profit is added to any other income and taxed on the ordinary brackets plus the Medicare levy. There is no separate business rate and no company rate, which is both simpler and, at higher profits, more expensive than incorporating.

How much should I set aside for tax?

The percentage shown above, which is your actual bill rounded up to give a buffer. On $75,000 of profit with no other income it works out around 20%. It climbs quickly as profit rises, so recalculate rather than assuming last year's percentage still fits.

When do I have to register for GST?

Once your turnover reaches $75,000 in a twelve month period, and turnover means what you invoiced before expenses. That trips people up constantly, because a business with $95,000 of income and a small profit still has to register. You can also register voluntarily below the threshold.

Is the GST I collect part of my income?

No, and treating it as income is how businesses end up unable to pay their BAS. You collect it on behalf of the ATO, hold it, and remit it, minus the GST credits on your own purchases. Keep it out of your set-aside percentage and ideally in a separate account.

What are PAYG instalments?

Quarterly prepayments of your expected tax, which the ATO starts once you lodge a return with enough tax owing. It is the same tax paid earlier rather than additional tax. The difficult year is the first one, when you pay last year's bill and start prepaying this year's at the same time.

Can I claim my car, phone and home office?

The work-related portion of each, with records to back it up. Cars can use the cents per kilometre method up to 5,000 business kilometres or a logbook for a larger claim. Home office and phone need a reasonable apportionment. The ATO's interest is in the method and the evidence, not the size of the claim.

Do I pay tax on money I take out of the business?

No, because there is nothing to take it out of. As a sole trader you and the business are the same legal person, so you are taxed on the profit regardless of whether it stays in the business account or funds your groceries. Drawings are not a tax event.

Do I have to pay myself super?

Not compulsorily, which is the trap. There is no employer to pay it, so unless you act, nothing goes in at all. Personal contributions are deductible if you lodge a notice of intent with your fund before lodging your return, so the tax saving takes some of the sting out of doing it yourself.

How does a side business work if I also have a job?

The profit stacks on top of your salary, so it is taxed at the marginal rate your combined income reaches. That is often a nasty surprise, because a side business earning $20,000 on a $90,000 salary is taxed at 32% rather than at the low rates a $20,000 income would face on its own.

When should I consider a company instead?

Usually when profit consistently exceeds what you need to live on, since a company rate on retained profits can beat the top individual rates, and when you want liability separation. It also brings real cost and administration, so it rarely pays below six figures of profit. That's a conversation for an accountant, not a calculator.

What records do I need to keep?

Invoices issued, receipts for expenses, bank statements, and a logbook if you're claiming a car properly. The ATO can ask for evidence up to five years after you lodge. Accounting software makes this trivial and costs less than the deductions you'll stop forgetting.

How accurate is this calculator?

It applies the current individual rates, Medicare levy, low income tax offset and HECS-HELP thresholds to your profit, so the tax figure is solid. It does not model the small business income tax offset, depreciation schedules, trading stock, or the personal services income rules, all of which can change your position.

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