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How much tax does a sole trader pay?

What are the standard tax rates for sole traders in Australia? How much tax will I need to pay and how is it assessed?

Cliona Elliott

Cliona Elliott, Senior Editor at

If you operate under a sole trader business structure you will be taxed as part of your personal income in your income tax return. This means the individual tax rates apply to the income earned through your business and personal income sources. The tax-free threshold of $18,200 also applies.

The amount of tax you pay as sole trader is based on:

  • the revenue generated from your business
  • any additional sources of income
  • any tax deductions you are eligible to claim 

You taxable income is basically the money earned through the sale of your goods and services (excluding GST) minus your business expenses. The ATO has a tax table that shows the amount of tax paid on different taxable income brackets:

$0          - $18,200        Nil
$18,200 - $37,000        19c for each $1 over $18,200
$37,000 - $90,000        $3,572 plus 32.5c for each $1 over $37,000
$90,000 - $180,000      $20,797 plus 37c for each $1 over $90,000
$180,000 and over       $54,097 plus 45c for each $1 over $180,000

You can find more detailed information on sole trader tax, GST, deductions, etc on the ATO's website: https://www.ato.gov.au/business/starting-your-own-business/before-you-get-started/choosing-your-business-structure/sole-trader/

 

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