How do sole traders lodge a tax return?
You will need to submit a tax return via E-tax or visit a professional who can assist with your lodgement. In order to use E-tax you will need to link to your myGov account to E-tax in order to submit your tax through E-tax. This is a simple way for sole traders to manage their tax and claim online.
If you choose to visit a registered tax agent to help submit your tax return they may assist you with identifying what you can claim and how to do so. This is recommended if you are unsure how to use e-tax or if you are not sure what you are eligible to claim.
What can I claim?
Generally you can claim any self-education courses, investment expenses, rental properties (and associated costs) and work related expenses. The work related expenses you can claim will depend on the nature of your work, for example if you need to travel for work and if you work out of home as a sole trader.
How much tax do I need to pay?
Here are the tax rates for sole traders based on the 2013-2014 financial year:
- $1 – $18,200 – Nil
- $18,201 – $37,000 – 19c for each $1 over $18,200
- $37,001 – $80,000 – $3,572 plus 32.5c for each $1 over $37,000
- $80,001 – $180,000 – $17,547 plus 37c for each $1 over $80,000
- $180,001 and over – $54,547 plus 45c for each $1 over $180,000
Tips on preparing for tax time
As a contractor or consultant working as a sole trader you also need to learn about PSI (Personal Services Income)
If 50% of your income as a contractor or consultant is for your personal services and not products then you may be eligible for Personal Services Income which may change what you can claim at tax time.
What you can claim on PSI:
- Advertising assets for your business
- Registration and licensing fees
- Income insurance
- Salary or wages paid to individuals working for you
- Running expenses for an at-home office
- Fees or charges associated with your bank
- Tax expenses
- Statutory fees
What you can’t claim on PSI:
- Rent, mortgage interest, rates, land tax
- Payments to associates for support work
- Super contributions for associates
- Car expenses for more than one vehicle
To find out more about the requirements and specifics of claiming for PSI eligible earners please see this ATO document.
