Quick guide to tax time for self employed

As a self-employed person, there’s most likely a million business tasks you could be doing right now. But when tax time rolls around, it’s important to take the time to focus on collecting and coordinating your income information for the Australian Tax Office. Try these handy tips to make end of financial year a breezy business time for you, so you can get back to working on what you do best.

Know your responsibilities

Any income earnt over $18,200 in a financial year will incur tax. As your own boss, you’re responsible for lodging your income tax with your tax file number, so it’s important to make sure you’re setting aside money throughout the year for this purpose.

If you’re earning more than $75,000 a year (gross income), you’ll need to also keep in mind the goods and services tax (GST). It’s important to assess your earnings regularly as you’ll only have 21 days to register your business for GST to avoid penalties and interest.

Anyone who is self-employed and registered for GST will also need to complete a Business Activity Statement (BAS). This information is what the ATO will use to calculate your GST, Pay As You Go instalments, and tax obligations. It can be completed annually, quarterly or monthly depending on your business reporting requirements.

Tip: set up a separate bank account you can regularly deposit part of your takings into to stay on top of your tax contributions.

Identify your tax deductions

You’re entitled to make tax deductions for certain expenses related to earning your income. For example, you may be able to deduct home expenses including a computer, phone, or other electronic devices you must use for work purposes.

The ATO provides information on deductions you can claim, and has a handy myDeductions mobile phone app for free that helps you keep records of claims throughout the year.

Another way to reduce tax is to pre-pay some of your expenses when cash flow is healthy. You could consider paying the following in advance.

  • Business loans
  • Office and equipment lease payment
  • Business insurance
  • Business related subscriptions
  • Business travel, seminars and conference bookings
  • Telephone and IT services.

Claiming tax deductions? You must have a record to prove it! Keep all receipts of all work-related expenses.

Don’t forget the tax benefits of Super

Without the help of employer-paid superannuation contributions, it’s not unusual for the self-employed to find they’re not left with much money when it comes to retirement. Over a fifth (22%) of self-employed Australians had no superannuation at all in 2016, according to an ASFA study. This identifies a need for sole traders to actively save a separate retirement fund. Some of the self-employed workforce only has superannuation that is related to previously being an employee.

The good news is that super can be a tax-effective investment for retirement savings. Regardless of whether you’re self-employed or not, you’re able to claim a full deduction for contributions you make to your super if you don’t exceed the contributions limit for that year.

Check in on tax changes annually as there may be changes to tax breaks or deductions.

Get help

You don’t have to do it all alone. If you’re new to being self-employed, and having to keep track of your cashflow and books seems daunting, hire an accountant that’s a registered tax agent to do it for you. They can help you maximise your deductions, submit your tax return for you, and keep any necessary financial records you may need according to law.

When hiring an accountant, make sure you’re happy with the following details.

  • What services they offer.
  • How they communicate with you – are they helping you understand the process?
  • Their fees – what and when will you be charged?
  • Qualifications – are they a member of any reputable professional bodies such as the Institute of Chartered Accountants? Professional bodies like this will often impose high standards of work on members.

Embrace technology to make tax time easier too. Accounting software can not only help you raise invoices and reconcile bank statements, it can also create your BAS forms and keep track in real time how your business is positioned. With a monthly fee, the subscription-based software can make accounting easier and functional for you by being paperless across varied devices.

Make sure you’re happy with the workflow, data storage, and multi-platform use of a software before you commit.

Along with the benefits of being your own boss – flexibility, control, satisfaction – there are some not-so-glamorous tasks to the role such as tax time preparations. With the help of a few handy tips such as those found in this quick guide, you can make tax time a smart and simple process.

You could also consider business insurance to protect what you have worked so hard to create. When it comes to business insurance, the type you need will largely depend on what type of business you operate, its size, where it is, and how risk averse you are. For example, if you’re a café operator, your business insurance needs would be different to a sole tradesperson, or a business that operates from home. Find out more about business insurance with Choosi.


This article is an opinion only, provided for general information purposes and shouldn’t be considered or relied upon as professional or personal advice. If you have legal, tax, or financial questions, you should contact an appropriate professional.