How the Sole Trader Tax Calculator Works (With a Worked Example)
Estimates tax for a sole trader, including the small business income tax offset. This guide walks through what each input means, the formula behind the answer and a worked example using typical Australian figures. You can follow along in the free Sole Trader Tax Calculator.
Why it matters
Australian businesses deal with GST at 10%, BAS reporting, PAYG withholding for staff, super guarantee obligations and company or individual tax depending on structure. Getting pricing and margins right is the difference between busy and profitable.
What you need to enter
The calculator asks for 2 inputs. The table shows each one with the example value used later in this guide.
| Input | Example value |
|---|---|
| Net business income ($) | 70000 |
| Other taxable income ($) | 0 |
The formula
Tax is calculated at individual rates on total income. The offset is 16% of tax on business income, capped at $1,000.
Worked example
Entering the example values above gives these results:
| Result | Value |
|---|---|
| Estimated tax payable | $12,188.00 |
| Tax and Medicare before offset | $13,188.00 |
| Small business income tax offset | $1,000.00 |
| Set aside per month | $1,015.67 |
The headline figure is $12,188.00 (estimated tax payable). Change any input in the calculator and every result updates instantly, so you can test different scenarios side by side.
How the estimated tax payable changes with net business income
The table below keeps every other input at the example value and moves only “Net business income ($)” up and down by 10% and 20%. It shows how sensitive the estimated tax payable is to that one figure.
| Net business income ($) | Estimated tax payable |
|---|---|
| 56,000 | $7,548.00 |
| 63,000 | $9,893.00 |
| 70,000 | $12,188.00 |
| 77,000 | $14,428.00 |
| 84,000 | $16,668.00 |
At 56,000 the result is $7,548.00; at 84,000 it is $16,668.00. If a small change in this input moves the answer a lot, it is worth double-checking that figure before you rely on the result.
A practical tip
Put aside tax from every invoice into a separate account so PAYG instalments don’t catch you short.
Keep going
Before relying on the number, read Getting the Most From a Sole Trader Tax Calculator: Tips and Common Errors. You might also find these guides useful:
- Company Tax Calculator: Formula, Example and What the Result Means
- Using a Sales Commission Calculator in Australia: A Step-by-Step Guide
- Gross-Up Calculator Explained for Australians
Frequently asked questions
- When do I need to register for GST?
- When your annual GST turnover reaches $75,000, or $150,000 for non-profits. Taxi and ride-share drivers must register regardless of turnover.
- What company tax rate applies?
- 25% for base rate entities with turnover under $50 million, and 30% for other companies.
- Should I talk to an accountant?
- Yes, for structure, tax planning and compliance. These calculators give quick estimates only.
Run your own numbers in the Sole Trader Tax Calculator.
Open the calculatorGeneral information only. Rates and thresholds change, usually on 1 July. Confirm current figures with the ATO or the relevant authority, and get personal advice for decisions about your situation.