Sole trader tax: a simple guide
Updated 26 September 2026 · figures from the ATO and official sources
As a sole trader you and the business are the same person for tax. Your profit is added to any other income and taxed at normal individual rates, but no one takes tax out for you.
How much tax you pay
Profit is income minus business expenses. It’s taxed at the same rates as a salary: nothing on the first $18,200, 15% up to $45,000, then 30%, 37% and 45%, plus the 2% Medicare levy.
| Profit (no other income) | Tax for the year | Small business offset | Set aside | Per quarter |
|---|---|---|---|---|
| $30,000 | $1,098 | $171 | 4% | $274 |
| $50,000 | $5,427 | $843 | 11% | $1,357 |
| $75,000 | $13,520 | $1,000 | 18% | $3,380 |
| $100,000 | $21,520 | $1,000 | 22% | $5,380 |
| $150,000 | $38,570 | $1,000 | 26% | $9,643 |
The small business income tax offset
If your turnover is under $5 million you get 16% off the tax on your business profit, up to $1,000 a year. It’s applied automatically when you lodge.
PAYG instalments
After your first year, the ATO will usually ask you to pay tax in quarterly instalments, based on your last return. You enter the system automatically once your latest return shows business or investment income of $4,000 or more, tax payable of $1,000 or more and notional tax of $500 or more.
GST
You must register for GST within 21 days of your turnover reaching $75,000 a year (taxi and rideshare drivers from the first dollar). Then you add 10% to your prices and pay it to the ATO through your BAS. GST isn’t income, so keep it separate.
Super
Nobody pays super for you. You can make personal contributions and claim a tax deduction, up to the $32,500 concessional cap.
Three habits that make tax time easy
- Open a separate bank account for the business.
- Move your set-aside percentage into a savings account every time you’re paid.
- Keep receipts for every expense. The ATO’s myDeductions tool or any accounting app works.
General information only, not financial or tax advice. See our disclaimer.