Sole Trader Tax Calculator
Tax on your business profit for 2026-27: income tax, Medicare levy and HELP, plus how much to set aside each month so the bill never surprises you.
- Sole trader profit is taxed at the same individual rates as a salary. There is no separate business tax rate for sole traders.
- Nobody withholds tax from your invoices, so the ATO collects it through quarterly PAYG instalments instead.
| Income tax | $14,520 |
| Medicare levy | $1,600 |
| Total tax | $16,120 |
| After-tax income | $63,880 |
Resident rates for 2026-27 including the low income tax offset. Super is not included: sole traders have no super guarantee obligation to themselves.
Sole traders pay the same rates as employees
There is no special ABN tax rate. Sole trader profit lands on your individual tax return and is taxed under the ordinary 2026-27 tax brackets, with the same $18,200 tax-free threshold and the same Medicare levy. The differences sit around the edges: nobody withholds tax from your invoices, super is usually yours to fund rather than an employer's, and deductible business expenses come off your profit before tax applies. The full picture is in our ABN tax guide. If you bill a day rate rather than a project fee, the contractor pay calculator compares that rate against an equivalent salary once unpaid leave and super are counted.
| Profit | Tax + Medicare | After tax | Effective rate |
|---|---|---|---|
| $45,000 | $4,595 | $40,405 | 10.2% |
| $80,000 | $16,120 | $63,880 | 20.2% |
| $120,000 | $28,920 | $91,080 | 24.1% |
How much should a sole trader set aside for tax?
Set aside your effective rate, not your marginal bracket. On $80,000 of profit the total tax is $16,120, which is 20.2% of profit, so moving about $1,343 a month into a separate account covers the year. Add your HELP repayment on top if you have a study loan, and remember GST is a separate bucket entirely if you are registered.
Quarterly PAYG instalments do the saving for you
After your first profitable return, the ATO enrols you in PAYG instalments and collects the tax quarterly instead of in one bill. The entry test is $4,000 of instalment income plus a tax debt over $1,000. Estimate your quarterly figure with the PAYG instalment calculator, and if a slow year makes the pre-set amount too high, you can vary it down before the due date.
Sole trader BAS: do you have to lodge one?
Only if you are registered for GST. Being a sole trader creates no BAS obligation by itself; GST registration does. The ATO puts it in one line: once registered for GST, you need to lodge a business activity statement. Registration is compulsory once your GST turnover reaches $75,000, and also from day one if you drive a taxi, limousine or rideshare, or if you want to claim fuel tax credits. Below $75,000 it is optional, and plenty of sole traders never register.
Once you are registered, you report GST collected and GST credits on a BAS, usually quarterly, alongside any PAYG instalments and any tax withheld from staff. The BAS calculator works out the labels and what you owe.
If you are not registered for GST but the ATO has enrolled you in PAYG instalments, an instalment activity statement arrives instead. Same rhythm, fewer boxes, no GST section. Our instalment activity statement guide covers which form lands in your inbox and why. And if the ATO simply sends you an instalment notice with the amount already filled in, there is nothing to lodge at all unless you want to vary it.
Timing matters on the return itself this year. From Tax Time 2026 the ATO pre-fills contractor payments reported through the taxable payments annual report, and those reports are not due until 28 August, so the ATO is telling affected sole traders to lodge after that date. The detail is in contractor income pre-fill and the 28 August date.
Whatever you lodge, keep GST out of the profit figure you type into the calculator above. GST you collect was never your income.