As a sole trader, your business income is your personal income — taxed at individual rates with no separate business tax return.
Business profit is reported in your individual tax return and taxed at the same marginal rates as employment income, plus the Medicare Levy. There's no separate lower "business" rate for sole traders.
Once your business income is significant, the ATO will typically enter you into the Pay As You Go (PAYG) instalment system — requiring quarterly (or annual) prepayments toward your expected tax bill, reducing the shock of a large bill at tax time.
You'll need an Australian Business Number (ABN) to operate. GST registration becomes mandatory once turnover exceeds $75,000/year.
Keep records of all income and expenses for at least 5 years. Common deductible expenses include equipment, home office costs, professional development, and insurance.
Estimate your sole trader tax liability.
Use the Sole Trader Tax Calculator →Consider whether a company structure might suit your situation better as your business grows — this depends on income level, asset protection needs, and growth plans. Consult an accountant for tailored advice.