Sole Trader Taxes in Australia: Rates, GST and Deadlines (2026)

Short answer: A sole trader in Australia pays income tax on business profit at ordinary personal rates — nil up to $18,200, then 16% to $45,000 for 2025-26, falling to 15% from 1 July 2026 — plus the 2% Medicare levy. There is no separate business tax: profit is added to your other income and taxed as one amount. You must register for GST once turnover reaches $75,000. The income year ends 30 June, and the return is due 31 October if you lodge it yourself.

Australia’s income year runs 1 July to 30 June, and the ATO names each year by the date it ends: the “2026 tax year” means 1 July 2025 to 30 June 2026. Every figure below comes from the Australian Taxation Office and applies to a resident sole trader with a standard 30 June year end. If you have not registered yet, start with how to become a sole trader in Australia; if it is the return itself you are stuck on, the sole trader tax return covers the schedule that goes with it.

What taxes does a sole trader pay in Australia?

There is no company tax, no payroll tax on yourself and no separate business return. Everything runs through you as an individual.

Obligation	What it applies to	Key figure
Income tax	Net profit — business income minus deductible expenses	Progressive, nil to 45%
Medicare levy	Your taxable income	2%
GST	Gross turnover from your enterprise	10%, once turnover hits $75,000
PAYG instalments	Not a tax — prepayments of the above	Set by the ATO from your last return

A sole trader is not a separate taxpayer. You use your own tax file number for the business, and profit is added to any other income you have — wages, interest, rent — before the rates below apply. That catches people running a side business alongside a job: the profit sits on top of the salary and is taxed at your top marginal rate, not from zero.

How much tax do I pay as a sole trader in Australia?

You pay on net profit at the same rates as everyone else. The 16% rate that applied in 2025-26 dropped to 15% from 1 July 2026, with the thresholds unchanged — that cut is law and is already built into the ATO’s 2026-27 withholding schedules. The ATO had not published a rate table for income years after 2026-27 at the time of writing, so check the ATO resident tax rates table before relying on any figure for a later year.

Taxable income	2025-26 rate	2026-27 rate
$0 – $18,200	Nil	Nil
$18,201 – $45,000	16%	15%
$45,001 – $135,000	30%	30%
$135,001 – $190,000	37%	37%
$190,001 and over	45%	45%

For the 2026 return specifically, the ATO expresses it in dollars:

Taxable income (2025-26)	Tax on this income
$0 – $18,200	Nil
$18,201 – $45,000	16c for each $1 over $18,200
$45,001 – $135,000	$4,288 + 30c for each $1 over $45,000
$135,001 – $190,000	$31,288 + 37c for each $1 over $135,000
$190,001 and over	$51,638 + 45c for each $1 over $190,000

Neither table includes the Medicare levy of 2%, which is charged separately on taxable income. A reduction applies at low incomes: for 2025-26 a single person with no seniors offset pays no levy at or below $28,011, and a reduced levy up to $35,013. These thresholds are reviewed most years, so use the figures for the year you are actually lodging.

One concession you do not have to claim: the small business income tax offset reduces the tax on your net small business income by 16%, capped at $1,000 per person per year, where aggregated turnover is under $5 million. The ATO calculates it and shows it on your notice of assessment.

Do I need an ABN, and is it different from my TFN?

They are different things and you need both. Your tax file number is the one you already have — a sole trader does not get a business TFN. An Australian Business Number is free, applied for through the Australian Business Register, and identifies you to the people who pay you.

The commercial reason to hold one is blunt. Where you do not quote an ABN and the payment for goods and services is more than $75 excluding GST, the payer must withhold at the top rate of tax — 47%, being the 45% top marginal rate plus the 2% Medicare levy — and remit it to the ATO. You get it back through your return, but you have lent the government half your fee in the meantime. Put the ABN on every bill; invoicing as a sole trader covers what else has to appear.

When do I have to register for GST?

You must register when your GST turnover reaches $75,000, or when you start a business and expect to reach $75,000 in the first year. Non-profit bodies have a $150,000 threshold. Once you cross it you have 21 days to register, so if you are anywhere near the line, check monthly rather than annually.

Two details do most of the damage:

• Turnover means gross income, not profit. A contractor billing $80,000 who nets $40,000 is over the threshold.
• Taxi, limousine and ride-sourcing drivers must register from the first dollar, at any turnover. There is no threshold for that work at all.

The test has two limbs: current GST turnover (this month plus the previous 11) and projected turnover (this month plus the next 11). Reaching $75,000 on projected turnover means you must register. Crossing it on current turnover alone does not, if your projected turnover is genuinely going to stay under the threshold — so a single unusually large job need not lock you in. If you register late, the ATO can make you pay GST on every sale since the date registration was required — even though you never charged it — plus penalties and interest.

Once registered, most sole traders lodge a quarterly BAS.

Quarter	BAS due
July – September	28 October
October – December	28 February
January – March	28 April
April – June	28 July

Lodging online may make you eligible for an extra two weeks on every quarter except October–December, which already carries a one-month extension. If a due date falls on a weekend or public holiday, you have until the next business day.

When are my tax deadlines?

What is due	Date (for the year ended 30 June 2026)
Individual return, lodging it yourself	31 October 2026 — a Saturday, so the next business day
Payment on a self-lodged return	21 days after the lodgment due date at the earliest — the date printed on your notice of assessment governs
Return via a tax agent, most clients	15 May 2027
Return via an agent, if last year’s bill was $20,000 or more	31 March 2027
Return via an agent, if any prior-year return was outstanding at 30 June 2026	31 October 2026
TPAR, if you pay contractors in a reporting industry	28 August 2026

Do not rush to lodge in July. The ATO pre-fills your return with what third parties report about you, and a business that pays contractors does not have to lodge its Taxable Payments Annual Report until 28 August — so payments reported about you generally are not available before then. Lodging before your pre-fill is complete risks an amendment and a clawback of any refund.

Late lodgment can attract a failure to lodge penalty of one penalty unit for each 28 days (or part of 28 days) overdue, to a maximum of five units for an individual. The ATO says it generally does not penalise isolated cases of late lodgment and will warn you before applying one. The penalty unit rose to $364 for infringements on or after 1 July 2026, so the ceiling for an individual is $1,820. Interest is charged on unpaid amounts at the general interest charge — 11.43% a year for the July–September 2026 quarter, reset every quarter — and general interest charge incurred on or after 1 July 2025 is no longer tax deductible.

Do I have to pay PAYG instalments?

PAYG instalments are not an extra tax. They are income tax paid during the year instead of one lump afterwards, and they are credited against your final bill.

The ATO enters you automatically when your latest return shows all three of: instalment income of $4,000 or more, tax payable of $1,000 or more on the notice of assessment, and notional tax of $500 or more. You will be notified, usually to your myGov inbox.

Instalments fall due on the same quarterly dates as BAS: 28 October, 28 February, 28 April and 28 July. If you receive an instalment notice and pay the amount shown, there is nothing to lodge. Pay everything before you lodge the return, so the credits land in the assessment.

The mechanic that surprises new sole traders is the one-year lag. In year one there is no prior return, so no instalments — the whole first-year bill arrives at once, months after the money was spent. Set the tax aside from the first invoice.

What can I claim, and how do car expenses work?

You deduct expenses incurred in earning your income, apportioned where there is private use. Tools, software, insurance, phone, home office and professional fees are the usual claims; expenses and receipts for sole traders has the detail on substantiation.

Cars get their own regime, and sole traders may choose between two methods.

Method	Rate / basis	Limit
Cents per kilometre, 2025-26	88c per km	5,000 business km per car — maximum $4,400
Cents per kilometre, 2026-27	91c per km	5,000 business km per car — maximum $4,550
Logbook	Business-use percentage × actual costs	No cap, but 12 continuous weeks of records in the first year

The cents per kilometre rate covers everything — fuel, registration, insurance, servicing, depreciation — so nothing may be added on top. No receipts are needed, but you must show how you worked out the kilometres. The 2026-27 rate of 91c is not straight indexation: it is a base rate of 89c plus a one-off 2c uplift for that year only, so future indexation runs off 89c. Above 5,000 genuine business kilometres the logbook method almost always wins — cents per kilometre versus the logbook compares the two.

The $20,000 instant asset write-off applies to assets each costing less than $20,000 and first used or installed ready for use by 30 June 2026, for businesses with aggregated turnover under $10 million that apply the simplified depreciation rules. The ATO had published no limit for assets first used after 30 June 2026 at the time of writing: a permanent version was announced in the 2026-27 Budget but was not law, so check the ATO’s instant asset write-off page before relying on it.

How long do I keep records, and where does Keel fit?

The business rule is five years, running from when you prepared or obtained the record or completed the transaction, whichever is later. Depreciating assets and CGT assets are longer: for as long as you hold them, plus five years after disposal. Records must be in English or readily convertible to English, unaltered, and produced on request.

Five years of invoices, receipts and trip logs is the actual work of being a sole trader. Keel: Invoice Maker & Receipts, by Ilura Technology OÜ, is built for that job and nothing else. It runs entirely on your iPhone: no account, no sign-in, no bank connection, no cloud sync. Its App Store privacy label reads “Data Not Collected”.

The honest tradeoff is that nothing imports itself. There is no bank feed reconciling transactions overnight — you create the invoice, you photograph the receipt (Apple Intelligence reads the merchant, total, tax and date on device), you log the trip. In exchange the records stay in your hands, the ledger is append-only and hash-chained, and at 30 June the Accountant Pack exports the whole year as a CSV plus a one-page summary PDF you can hand over.

The free tier gives you unlimited invoices, receipts and mileage, with a “Made with Keel” footer on invoices. Keel Pro is a one-time $249.99 Lifetime purchase, not a subscription. Keel: Invoice Maker & Receipts on the App Store.

Frequently asked questions

How much tax does a sole trader pay in Australia? You pay ordinary individual rates on net profit: nil to $18,200, then 16% to $45,000 for 2025-26, 30% to $135,000, 37% to $190,000 and 45% above that, plus the 2% Medicare levy. From 1 July 2026 the 16% rate drops to 15%. Business profit is added to any other income you have before the rates apply.

Do I need an ABN to work as a sole trader? You are not fined for trading without one, but you should have one. Where you do not quote an ABN and the payment exceeds $75 excluding GST, the payer must withhold 47% and send it to the ATO. An ABN is free through the Australian Business Register and is required before you can register for GST.

Do I get a separate tax file number for my business? No. A sole trader uses their existing personal TFN for both business and personal dealings with the ATO. Separate tax file numbers are only issued to separate legal entities, such as companies, trusts and partnerships. If you later incorporate, the company gets its own TFN and its own ABN.

When do I need to register for GST in Australia? When your GST turnover reaches $75,000, or when you expect to reach it in your first year. You then have 21 days to register. The test is gross turnover, not profit. Taxi, limousine and ride-sourcing drivers must register from the first dollar regardless of turnover, and registration is also required to claim fuel tax credits.

When is my tax return due as a sole trader in Australia? 31 October if you lodge it yourself, for the year ended the previous 30 June; the next business day applies when that falls on a weekend. Clients of a registered tax agent generally have until 15 May, or 31 March where the last return produced a bill of $20,000 or more. You must lodge even at a loss.

How long do I have to keep business records in Australia? Five years, counted from when you prepared or obtained the record or completed the transaction, whichever is later. Records for depreciating assets and CGT assets must be kept for as long as you hold the asset plus five years after you dispose of it. Records must be in English or readily convertible to English and cannot be altered.

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This article is general information, not tax advice. Consult a qualified Australian tax professional.