Sole trader tax calculator
A rough estimate of what you will owe in income tax, Medicare levy and HELP repayment, plus the GST to set aside, and how much of your income you keep.
Estimate only, for Australian tax residents. Uses ATO rates for the year selected. Low-income thresholds and HELP bands are indexed each year. Excludes the Medicare levy surcharge, PAYG instalments and offsets beyond LITO. This is not tax advice. Check ato.gov.au or your accountant.
Related: GST calculator · Sole trader tax deductions · How to calculate GST
Sole trader tax questions
How much tax does a sole trader pay in Australia?
A sole trader pays income tax at the individual resident rates on their net profit (income minus deductible expenses), plus the 2% Medicare levy, plus any HELP or HECS repayment. There is no separate company tax. Business profit is taxed as your personal income. If your business turnover is $75,000 or more you also register for and collect GST, which you pass on to the ATO each BAS.
How much should I set aside for tax?
A common rule of thumb is 25% to 35% of every payment, but the right figure depends on your total income and deductions. The calculator works out a set-aside percentage for your numbers. If you are registered for GST, set aside the GST portion (roughly 1/11 of GST-inclusive income) on top of that.
Do I pay GST as a sole trader?
Only if your GST turnover is $75,000 or more over 12 months, or you provide taxi or rideshare services. GST you charge customers is collected on the ATO's behalf and paid over each BAS. It does not reduce your income tax, and you can claim back the GST on your business purchases.
Are my business expenses tax deductible?
Expenses you incur in running your business are generally deductible against your income: tools, equipment, vehicle running costs, home office, the work portion of phone and internet, software, insurance, accounting fees and more. You need records, so keep every receipt. That is what Instant Receipts is for.
Does this include the Medicare levy surcharge?
No. The Medicare levy surcharge (an extra 1% to 1.5% for higher earners without private hospital cover) depends on your family situation and private health insurance, so it is not included in this estimate.