Sole Trader Tax Returns

Running a business as a sole trader keeps things simple — one owner, one ABN, and no company structures to maintain. But come tax time, even the most straightforward businesses can face real complexity. Between claiming the right deductions, meeting BAS deadlines, and staying on the ATO’s good side, there’s a lot that can go wrong without the right support.



At Taxcor, we work exclusively with small and medium-sized businesses, so we understand exactly what sole traders need. Our fixed-fee packages cover everything from your annual tax return through to bookkeeping, BAS, and ongoing advice — without the billable-hour surprises.

Simple structure

Professionally managed

Cost effective

Fewer compliance

What Is a Sole Trader?

A sole trader is the simplest business structure available in Australia. You own and operate the business in your own name, register an ABN, and are personally responsible for all business debts, liabilities, and obligations. There is no legal separation between you and your business.



Business income is taxed as part of your personal income tax return, at your individual marginal tax rate. This means there is no separate company tax rate to manage — but it also means your personal assets are on the line if things go wrong.

Example:

John runs a photography business as a sole trader. He handles everything himself — the shoots, the editing, the invoicing. At year end, his business income is added to any other personal income he has received and taxed at his applicable marginal rate.

Advantages

Simple and inexpensive to set-up

Full control over business decisions

Fewer compliance obligations than other structures

Business losses can offset other personal income

Lower accounting and administration costs

Disadvantages

Unlimited personal liability — your personal assets are exposed

No ability to split income with family members

The business depends entirely on you

Limited asset protection compared to companies or trusts

Can face barriers when accessing business finance

Things to Consider

The biggest risk with operating as a sole trader is unlimited liability. Because there is no legal separation between you and your business, personal assets such as your home, savings, and vehicle can be at risk if the business incurs debts or faces legal action.


Beyond liability, sole traders need to manage a range of ongoing tax obligations. If annual business turnover reaches $75,000 or more, GST registration is mandatory, and Business Activity Statements must be lodged monthly or quarterly. A business schedule must also be included with your individual tax return each year.


Unlike employees, sole traders are not required to pay themselves superannuation — but voluntary contributions are strongly recommended for long-term retirement planning. Keeping solid financial records is equally important, with the ATO requiring business records to be retained for at least five years.


It is also worth reviewing whether a sole trader structure remains right for you as the business grows. In some situations, moving to a company or trust structure can provide better asset protection and tax planning outcomes. We can help you assess your options at any stage.

How We Can Help

We take care of your accounting and tax compliance so you can focus on running the business. Our fixed-fee sole trader services cover:

ABN, TFN, and GST registration

Business structure review and advice

BAS and IAS preparation and lodgement

Bookkeeping and payroll services

Tax planning and minimisation strategies

Sole trader tax return preparation and lodgement (including business schedule)

Taxable Payments Annual Report (TPAR) preparation

Xero, MYOB, or QuickBooks setup and training

Ongoing software and compliance support

Fixed-Fee Packages for Sole Traders

Our fixed-fee accounting packages include:


  • Fixed annual or monthly pricing — no hidden costs
  • Monthly accounting and bookkeeping packages available
  • General accounting advice included
  • Basic tax planning as included

Cloud Accounting Software

We support businesses using Xero, MYOB, and QuickBooks. Whether you need a full setup, a data clean-up, or ongoing training, we can help.

Frequently Asked Questions

  • Do sole traders need to lodge a tax return?

    Yes. Sole traders must lodge an individual tax return each financial year, including a business schedule that reports all business income and expenses to the ATO.

  • What tax rate does a sole trader pay?

    Sole traders do not pay a flat business tax rate. Business profit is added to any other personal income and taxed at the individual marginal tax rates set by the ATO. The rate you pay depends on your total income for the year.

  • What are the benefits of using a tax accountant for a sole trader return?

    A good accountant does more than lodge your return. We help identify every deduction you are entitled to, ensure your records are compliant, reduce the risk of ATO errors or penalties, and provide practical advice that can save you money and time.

  • What happens if I lodge my tax return late?

    Late lodgements can attract failure-to-lodge penalties and general interest charges from the ATO. The longer it is left, the more it can cost. Lodging on time avoids all of this.

  • Can you help with overdue tax returns?

    Yes. Whether you have missed one year or several, we can help you get back on track. We will organise your records, prepare the outstanding returns, identify any deductions you may have missed, and lodge everything with the ATO as efficiently as possible.

  • How long should sole traders keep financial records?

    The ATO generally requires business records to be kept for at least five years.

  • Do I need an ABN as a sole trader?

    Yes. An ABN is required to operate a business, issue invoices, and deal with suppliers and clients. Without one, customers may be required to withhold 47% from any payments made to you.

  • Do sole traders need to register for GST?

    GST registration is compulsory once your annual business turnover reaches $75,000. Some businesses choose to register before reaching that threshold. If you drive for a rideshare platform such as Uber, GST registration is required from day one regardless of your income.

  • What is a BAS and do sole traders need to lodge it?

    A Business Activity Statement (BAS) is used to report GST collected and paid, along with PAYG instalments, to the ATO. If you are registered for GST, you will generally be required to lodge BAS either monthly or quarterly.

  • What expenses can a sole trader claim?

    Sole traders can generally claim deductions for expenses directly related to running the business. Common deductions include office supplies, materials, phone and internet, vehicle expenses, home office costs, professional subscriptions, accounting fees, business insurance, and employee or contractor costs. Superannuation contributions made for yourself may also be deductible.

  • Can I mix personal and business expenses?

    Mixing personal and business expenses creates bookkeeping problems and can lead to incorrect tax claims. We recommend using a separate bank account for all business transactions — it makes everything cleaner and reduces the risk of issues at tax time.

  • How often should I update my bookkeeping?

    Ideally weekly or monthly. Regular bookkeeping keeps your records accurate, makes BAS preparation straightforward, and gives you a real-time view of how the business is performing.