Sole trader tax on net profit.
Total tax + Medicare
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Income tax
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Net profit after tax
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Your breakdown
Updates live as you type| Income band | Rate | Tax on the slice |
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You and your business are the same taxpayer
The defining feature of being a sole trader in Australia is that there is no legal line between you and the business. You trade under your own tax file number, the business profit is simply your income, and it is taxed at the ordinary resident rates with the Medicare levy on top. There is no separate business tax return and no company tax rate to worry about. This calculator takes your net business profit, the figure left after deducting genuine business expenses from your revenue, and runs it through the resident brackets plus the 2 percent Medicare levy to show your total bill and what you keep.
Reading the resident brackets as a sole trader
For 2026-27 the resident scale starts with the tax-free threshold up to $18,200, then 16 percent to $45,000, 30 percent to $135,000, 37 percent to $190,000, and 45 percent above that. Because the rates are marginal, only the slice of profit inside each band is taxed at that band's rate. A profit of $90,000 does not get taxed at 30 percent on the whole lot; the first $18,200 is free, the next chunk is at 16 percent, and only the part above $45,000 reaches 30 percent. Understanding this stops the common panic about a single extra dollar of profit somehow costing you a fortune.
A $90,000 profit, broken down
Enter a net profit of $90,000 and the tool returns income tax of $17,788, a Medicare levy of $1,800, a combined bill of $19,588, and net profit after tax of $70,412. The band-by-band working is below.
That works out to an effective rate of about 21.8 percent on the whole $90,000, well below the 30 percent top marginal rate that band sits in, which is the marginal-versus-average distinction in action.
The cash-flow traps that bite first-year sole traders
Two things blindside people in their first year of self-employment. The first is that no employer is withholding PAYG for you, so the entire $19,588 in the example falls due as one lump after you lodge, unless you have set money aside. The ATO's answer is the PAYG instalment system: once your business income is established, you start paying tax quarterly in advance based on the prior year, which smooths the shock but also means you can briefly owe two years of tax in the same period during the transition. The hard-won tip from every accountant is to park 25 to 30 percent of every invoice in a separate account the moment it is paid, and never touch it.
The second surprise is superannuation. As a sole trader you have no employer paying the 12 percent super guarantee on your behalf, because you are not an employee of anyone. Your retirement saving is entirely voluntary, and it is easy to reach your fifties having built a healthy business but almost no super. You can make personal deductible contributions up to the $30,000 concessional cap and claim them against this profit, which both builds your super and reduces the tax shown here. A further point worth flagging: this calculator does not deduct HECS or HELP repayments, which kick in once your repayment income passes the first threshold and are collected on top of the figures above, so a sole trader with a study debt should add that separately.
Do I need to register for GST as a sole trader?
You must register for GST once your annual turnover reaches $75,000, and from that point you add 10 percent GST to your invoices and remit it to the ATO. GST is separate from the income tax this tool calculates; it is money you collect on behalf of the government, not your income, so do not confuse a GST-inclusive invoice with profit when you enter figures here.
When does becoming a company make sense?
A company is taxed at a flat 25 percent for small business, which only beats your personal rates if profits are high and you genuinely leave money in the company to reinvest. The moment you pay it all out to yourself it is taxed in your hands anyway, so the saving evaporates. For most sole traders earning under roughly $140,000 of profit, the simplicity and lower compliance cost of staying a sole trader wins.