How this works
As a sole trader, no one withholds tax from your business income, so a big bill can arrive at tax time. A simple habit is to move a fixed percentage of every payment into a separate account. This calculator works out that percentage for you.
We add your expected business profit to your other income (such as wages), then estimate income tax using the ATO resident rates and the 2% Medicare levy on the total. Next we take away the tax you'd pay on your other income alone. What's left is the extra tax caused by your business income, and dividing it by your profit gives the set-aside %. Because the business income sits on top of your wages, it's taxed at your highest marginal rate, which is why the % is often higher than people expect.
If you're registered for GST, 1/11 of every GST-inclusive sale isn't yours. It goes to the ATO on your BAS, so hold it separately as well. Once you lodge a return with business income, the ATO may put you into PAYG instalments, regular payments towards next year's tax. This calculator doesn't work out instalments, so see the ATO page for how they work.
FAQ
How much should a sole trader set aside for tax in Australia?
It depends on your total income. This calculator estimates the extra income tax and Medicare levy your business profit adds, as a percentage of that profit.
How do I work out GST on a sale?
If the price includes GST, the GST portion is one-eleventh (1/11) of the total. For $1,100 that is $100.
What are PAYG instalments?
Regular payments the ATO may ask you to make towards your expected tax on business and investment income. See ato.gov.au for when they apply.