As a sole trader, it’s often tricky to figure out exactly how much tax you’ll need to set aside to cover your annual tax bill. Most income tax calculators are set up for permanent employees working PAYG jobs, and so aren’t completely accurate for the self-employed.
That’s why we decided to create our own tax calculator, specifically for self-employed freelancers, contractors, and other sole traders. Unlike other PAYG income tax calculators, it lets you take into account any tax deductions you are eligible for, while providing an estimate of how much you’ll owe across the different taxes and levies.
Ready to find out how much tax you’ll need to pay? Plug your numbers into our simple tax calculator below to get the totals 👇
Tax calculator for Financial Year 2024/25
Disclaimer: Please note the tax rates shown above are an estimate based on the figures you’ve provided and don’t take into account factors such as secondary tax obligations. Once Hnry becomes your tax agent, we can factor these in and ensure you’re always taxed at the correct rate. If you have any questions, please reach out to the team.
Tax calculator for Financial Year 2023/24
With the stage three tax cuts now in full effect, the amount of tax you’ll have to pay this financial year (FY) may look a little different than last year.
That in mind, if you’re still finalising your tax return for FY 2023/24, you can use this tax calculator instead:
Disclaimer: Please note the tax rates shown above are an estimate based on the figures you’ve provided and don’t take into account factors such as secondary tax obligations. Once Hnry becomes your tax agent, we can factor these in and ensure you’re always taxed at the correct rate. If you have any questions, please reach out to the team.
Key Taxes for the Self-Employed
Income tax
You’re required to pay tax on all your income, whether it comes from a full time job or a self-employed gig. The ATO calculates your income tax by adding up your earnings from all your sources of income (PAYG/salary jobs, self-employed income, investment income etc) and applying an effective tax rate as per our progressive tax rate system.
If you’re a side-hustler, there’s sometimes confusion around why tax is higher on a secondary income, and how to calculate the amount of tax owed on self-employed earnings – but rest assured, the income tax rates for salaried earners and self-employed individuals are exactly the same.
GST
If you expect to earn over $75,000 in self-employed income over the next 12 months, you’ll be required to register for and charge GST.
What this means is that you’ll need to charge customers an additional 10% GST on top of your regular prices. This 10% is then payable to the ATO whenever you lodge your BAS.
If you make business purchases, the GST you pay for these will reduce the amount of the GST you owe to the ATO.
📖 Need more info? Check out our sole trader guide to GST
Medicare levy
On top of income tax, you’ll also need to pay the Medicare levy for your self-employed income. This is levied 2% of your earnings, provided you’re within certain earnings thresholds.
If you are a lower earner, you may be eligible for a reduction, or an exemption. If you’re a higher earner, and you don’t have private health insurance, you may need to pay the Medicare levy surcharge – an extra 1%-1.5%, depending on your situation.
📖 For more information on earnings thresholds and the Medicare levy surcharge, check out our sole trader guide to Medicare.
Student loan
If you currently have a student loan, and you’re earning over the annual threshold of $51,550 in the 2023/24 financial year, you’ll be required to make repayments on that loan at a rate determined by your income level.
This rate applies to your sole trader income, as well as your PAYG income – there’s no way around it, sorry!
📖 Check out our handy guide to paying off your student loan as a sole trader.
How Hnry Helps
Hnry is an award winning app and tax service, designed specifically for sole traders. For just 1% + GST of your self-employed income, capped at $1,500 a year, Hnry will calculate and pay all your taxes, levies and whatnot for you, including:
We also lodge your annual tax return for you – it’s all part of the service. Better still, using the Hnry platform costs less than using a traditional accountant, and is entirely tax deductible.
If that sounds good to you, join Hnry today. Never think about tax again!
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