Sole Trader Tax Return

Sole traders

A sole trader is an individual running a business. It is the simplest and cheapest business structure.
If you operate your business as a sole trader, you are the only owner and you control and manage the business.
You are legally responsible for all aspects of the business. Debts and losses can't be shared with other individuals.
You can employ workers in your business, but you can’t employ yourself.
As a sole trader, you are responsible for paying your worker's super. You're also responsible for your own super and may choose to pay it into a fund for yourself to help save for your retirement.

Key features

As a sole trader, you:
  • use your individual tax file number when lodging your income tax return
  • report all your income in your individual tax return, using the section for business items to show your business income and expenses (there is no separate business tax return for sole traders)
  • apply for an ABN and use your ABN for all your business dealings
  • register for Goods and Services Tax (GST) if your annual GST turnover is $75,000 or more
  • pay tax at the same income tax rates as individual taxpayers and you may be eligible for the small business tax offset
  • put aside money to pay your income tax at the end of the financial year - usually, you will do this by paying quarterly Pay As You Go (PAYG) instalments
  • claim a deduction for any personal super contributions you make after notifying your fund.
As a sole trader you can't claim deductions for money 'drawn' from the business. Amounts taken from the business are not wages for tax purposes, even if you think of them as wages.

Personal services income (PSI)

If you're paid mostly for your personal efforts, skills or expertise, you might be receiving personal services income (PSI) and you may have to treat deductions in relation to this income differently.

If you operate your business as a sole trader, you must lodge a tax return even if your income is below the tax-free threshold. This includes:
  • tax return for individuals including the supplementary section
  • business and professional items schedule for individuals.
In your return, report:
  • your business income less the business deductions you can claim
  • other income, such as salary and wages (from a payment summary or income statement), dividends and rental income, less any deductions against this income.
You don't have to work out the amount of tax you are liable to pay. 
We'll do this for you when you lodge and issue an assessment showing either the amount of tax owing to us or your refund. 
If you have paid PAYG instalments during the income year, we'll automatically credit these instalments to you in your assessment.

When to lodge

Normally, Sole trade Tax return is due by 31 October. If you lodge through our registered tax agent, they’ll tell you when they will lodge your tax return.


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