Sole trader tax calculator for freelancers
What you owe the ATO this year, what to put away from each invoice, and whether you have to charge GST yet.
Last updated 14 October 2026
GST check
How sole trader tax works in Australia
A sole trader is taxed as a person, not a business. Your freelance profit (what clients paid you, minus expenses) goes on your own tax return, on top of any salary, at the same brackets an employee pays. There is no separate self-employment tax. The difference from a job is that nobody withholds anything: you put the money aside yourself and pay it either when you lodge or in quarterly PAYG instalments once the ATO has seen a return with business income.
- Profit. Income minus expenses. An expense is anything you spend to earn the income: software, the home office share of rent and power, phone and internet, a laptop, insurance, a course, the accountant's fee.
- Income tax. Profit plus salary, through the 2026-27 brackets. The first $18,200 is tax-free. If you also have a job, the salary fills the lower brackets first, so freelance profit is taxed at your marginal rate, not from zero.
- Low income tax offset. Up to $700 off if your taxable income is under $66,667.
- Medicare levy. 2% of taxable income, reduced below about $35,000 and nil below $28,011. The Medicare levy surcharge (another 1 to 1.5% above $97,000 for singles without private hospital cover) is not in this calculator.
- Super. Optional. A personal contribution you claim as a deduction comes off taxable income and is taxed at 15% in the fund instead of 30% or 37% in your hands. Send the fund a notice of intent to claim before you lodge, or the deduction is lost.
2026-27 rates used
| Taxable income | Rate | Note |
|---|---|---|
| $0 to $18,200 | 0% | Tax-free threshold |
| $18,201 to $45,000 | 15% | Was 16% in 2025-26; falls to 14% from 1 July 2027 |
| $45,001 to $135,000 | 30% | |
| $135,001 to $190,000 | 37% | |
| Over $190,000 | 45% | |
| Medicare levy | 2% | Nil up to $28,011, phased in to $35,013 (2025-26 thresholds) |
| Low income tax offset | up to $700 | Full under $37,500, nil above $66,667 |
Sources: ATO, tax rates for Australian residents (15% bracket from 1 July 2026, legislated 2025); ATO, Medicare levy (2025-26 low-income thresholds); ATO, registering for GST; ATO, PAYG instalments; ABR, Australian Business Register. Checked October 2026.
GST: the $75,000 rule
Register for GST when your turnover reaches $75,000 in any 12 months, counted back or forward, or as soon as you expect it will. From then on you add 10% to invoices for Australian clients, claim back the GST you paid on expenses, and lodge a Business Activity Statement every quarter. Work for a client outside Australia, used outside Australia, is GST-free: 0% on the invoice, still counted toward the $75,000, credits still claimable. Under $75,000 registering is optional. Worth it if your clients are businesses (they claim the GST back and do not mind) and you have GST on your own expenses. Not worth four BAS a year otherwise.
PAYG instalments
After your first return with business income the ATO usually moves you to quarterly instalments, due 28 October, 28 February, 28 April and 28 July. The amount is based on last year; if this year looks different you can vary it on the activity statement. Instalments are prepayments: everything you pay during the year comes off the bill when you lodge. Not on instalments yet? Put the money aside anyway. The first year's bill arrives all at once.
No ABN on the invoice, 47% gone
Put your ABN on every invoice. Without it, an Australian business client has to withhold 47% of the payment and send it to the ATO. You get it back when you lodge, a year later. An ABN is free at abr.gov.au and usually issued the same day.
Questions people ask
How much tax should a sole trader set aside?
Depends on income. Around 15% of each invoice under $45,000 of profit, 20 to 25% up to about $100,000, 30% or more above that. Every dollar of profit between $45,000 and $135,000 is taxed at 30% plus 2% Medicare, so the average climbs as the year goes on. The calculator gives the exact percentage for your numbers; use that one.
Do I need an ABN to freelance?
In practice, yes. Without one, business clients must withhold 47% of what they pay you, and you cannot register for GST. Applying is free at abr.gov.au and most people get the number the same day.
When do I have to register for GST?
When your turnover hits $75,000 in any 12-month period, counting forward or back, or as soon as you expect it to. Register within 21 days of crossing. Below that it is your choice.
Do I charge GST to clients overseas?
No. Services for a client outside Australia, used outside Australia, are GST-free exports. The invoice shows 0% GST. Keep the client's address on file. The income still counts toward the $75,000 threshold.
Sole trader or company?
A sole trader is you, under your own name or a registered business name, taxed on personal brackets. A company is a separate entity taxed at 25% (small business rate), with its own return, ASIC fees and proper bookkeeping. Most freelancers stay sole traders until profit is well past $150,000 or a client contract demands a company. An accountant can run the numbers when you get there.
Can I pay myself super as a sole trader?
Yes. Nothing is compulsory, so nothing goes in unless you put it there. A personal contribution up to the concessional cap is deductible: it lowers this year's tax and the fund taxes it at 15%. Send your fund the notice of intent to claim before you lodge, otherwise the ATO will not allow the deduction.
When is the tax return due?
31 October for the financial year that ended on 30 June, if you lodge yourself. If you use a registered tax agent and are on their list by 31 October, usually May the following year. Tax owing is due 21 days after the assessment, or at the agent's due date.
Keep going
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