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, including the Small Business Income Tax Offset (16%, capped at $1,000). Low-income thresholds and HELP bands are indexed each year. Excludes the Medicare levy surcharge, non-commercial loss rules, personal services income (PSI) rules, and doesn't estimate your quarterly PAYG instalment amount. See the FAQ below for what that is. 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, less the Small Business Income Tax Offset (16%, capped at $1,000). 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.
What is the Small Business Income Tax Offset?
A tax offset worth 16% of the tax on your net small business income, capped at $1,000 a year. This calculator applies it automatically. It's the line labelled "Less small business income tax offset" in your results, above. It scales down if part of your taxable income is salary or wages rather than business profit, and it phases out entirely once aggregated turnover reaches $5 million, which won't affect most sole traders.
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.
What are PAYG instalments, and do I need to pay them?
PAYG instalments are prepayments toward your next income tax bill, usually paid quarterly instead of as one lump sum at tax time. The ATO automatically enters you into the system after a tax return where your instalment income is $4,000 or more, tax payable is $1,000 or more, and estimated tax is $500 or more, and you'll be notified through myGov if that happens. It doesn't change how much tax you owe overall, just when you pay it, and a rough quarterly figure is about a quarter of your total tax and Medicare levy from this calculator.
Are my business expenses tax deductible?
Yes. Expenses directly related to earning your business income are generally deductible, provided you keep a record of each one. See our sole trader tax deductions guide (linked above) for the full list, including the ones most people miss.
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.