What is Sole Trader (Australia)?
A sole trader in Australia operates the business in their own name (or a registered business name) with unlimited personal liability. Income is taxed as personal income via the individual tax return. Sole traders need an ABN, and may register for GST if turnover exceeds A$75,000.
Current Rate (Australian Financial Year: 1 July to 30 June)
Marginal income tax rates: 0% to A$18,200, 16% to A$45,000, 30% to A$135,000, 37% to A$190,000, 45% above (FY2025–26)
Example
A freelance developer earning A$120,000 profit pays approximately A$26,000 income tax + Medicare Levy 2% (A$2,400) on the personal return. Plus quarterly PAYG instalments based on prior year.
Related terms
The Australian Business Number is an 11-digit identifier issued to businesses by the Australian Business Register. Without an ABN, payers must withhold 47% from your invoice. Required for GST registration, business name registration, and most B2B trading.
A proprietary limited company is the most common Australian business entity. Owners' liability is limited to their share capital, and the company is a separate legal person. Maximum 50 non-employee shareholders. Must have at least one Australian-resident director.
PAYG Instalments are advance company tax (or income tax for sole traders) paid quarterly via BAS, calculated by the ATO based on prior year tax. Reduces the year-end tax balance.
Confused by Australia accounting jargon?
AccountsOS explains Australia terms in plain English and applies the right rules to your books automatically.
Try Free