Australia Tax Glossary for the Self-Employed

A plain-English guide to Australia tax terminology. Whether you are filing your first self-assessment or managing ongoing ATO obligations, this glossary covers the key terms every freelancer and sole trader should know.

How do I register for an Australian Business Number (ABN) as a sole trader?: To start as a sole trader in Australia, you typically need an Australian Business Number (ABN). You can apply for an ABN online through the Australian...
What is the difference between a TFN and an ABN in Australia?: A Tax File Number (TFN) and an Australian Business Number (ABN) serve different purposes for a sole trader: 1. **TFN (Tax File Number):** This is your...
When do I need to register for GST in Australia?: In Australia, you must register for Goods and Services Tax (GST) if your business's 'GST turnover' (gross income minus GST) is $75,000 or more per yea...
When are the Business Activity Statement (BAS) deadlines in Australia?: If you are registered for GST, you typically need to lodge a Business Activity Statement (BAS) quarterly. The standard quarterly due dates are: - **Qu...
What are the individual income tax rates in Australia for 2024–25?: For the 2024–25 financial year, Australia implemented 'Stage 3' tax cuts, changing the tax brackets. For Australian residents, the rates are: - **$0 –...
What is the Medicare Levy and how much is it in Australia?: The Medicare Levy is a contribution most Australian taxpayers make to help fund the public health system (Medicare). It is usually 2% of your taxable ...
How do PAYG instalments work for sole traders in Australia?: Pay As You Go (PAYG) instalments are regular payments you make towards your expected end-of-year tax liability. The ATO usually enters you into the PA...
How do I claim home office expenses in Australia (Fixed Rate vs Actual)?: As of July 2022, the ATO revised the methods for claiming home office expenses. There are two main methods: 1. **Fixed Rate Method (67 cents per hour)...
How can I claim car and motor vehicle expenses in Australia?: If you use your car for business (excluding commuting from home to your regular workplace), you can claim a deduction using one of two methods: 1. **C...
How do I claim a computer or laptop as a business expense in Australia?: Computers and laptops are considered 'depreciating assets' by the ATO. How you claim them depends on the cost: 1. **Cost $300 or less:** You can claim...
Can I claim my phone and internet bills as a business expense in Australia?: Yes, if you use your phone and internet for business purposes, you can claim a deduction. If you use the **Home Office Fixed Rate Method (67c/hour)**...
When are self-education and training expenses deductible in Australia?: You can claim a deduction for self-education expenses if the study has a direct connection to your current business activities as a sole trader. Speci...
Can I claim professional memberships and subscriptions in Australia?: Yes, you can claim the cost of professional memberships, unions, and subscriptions to trade, business, or professional journals if they are directly r...
What is the tax return deadline for sole traders in Australia?: If you are lodging your own tax return, the deadline is **31 October** each year. The Australian tax year runs from 1 July to 30 June. So, for the 202...
What records do I need to keep for my sole trader business in Australia?: The ATO requires you to keep records that explain all your business transactions. These must be kept for **5 years** from the date you lodge your tax ...
What must be included on a valid Australian tax invoice?: For an invoice to be a valid 'tax invoice' (required for GST purposes if the amount is over $82.50), it must contain: 1. The words 'Tax Invoice'. 2. T...
Do I need a separate business bank account as a sole trader in Australia?: Legally, a sole trader is not *required* to have a separate business bank account in Australia (unlike a company). You can use your personal account f...
What is Personal Services Income (PSI) and does it affect me in Australia?: Personal Services Income (PSI) is income produced mainly from your personal skills or efforts as an individual. It often applies to IT consultants, en...
Do sole traders have to pay superannuation in Australia?: As a sole trader, you are generally not required to pay superannuation for yourself. However, it is a very good idea for your retirement planning. If ...
What is the Small Business Income Tax Offset in Australia?: The Small Business Income Tax Offset (also known as the unincorporated small business tax discount) can reduce the tax you pay by up to **$1,000** eac...