Category: Tax Return

As a sole trader you do not lodge a separate business tax return. Your business income and expenses go into your individual tax return, and you pay tax on the profit at your personal tax rates. This guide explains what goes into a sole trader tax return, when it is due and how to avoid the mistakes that cost sole traders money.

How a sole trader tax return works

You lodge your normal individual tax return and complete the business and professional items section (the business schedule). This is where you report your business details, such as your ABN, main business activity and business address, together with your business income and expenses. Your net business profit or loss is then combined with any other income you earned, such as wages or interest.

What you need to report

Business income

• All sales, fees and payments received for your work, including cash
• Income from platforms and apps, such as rideshare, delivery and freelance marketplaces
• Government grants and other assessable business income

Business expenses you may be able to claim

• Materials and stock
• Vehicle expenses for business travel
• Phone, internet and software (business portion)
• Tools and equipment, including depreciation on larger assets
• Insurance, accounting and other professional fees
• Home office running costs, if you work from home

An expense is only deductible to the extent it was incurred in earning your business income, and you need records to prove it. Private use must be excluded.

Rules that catch sole traders out

Personal services income (PSI)

If most of your income is a reward for your personal skills or effort, for example as a contractor working mainly for one client, the PSI rules may apply. If they do, some deductions are restricted. The tax return asks a series of questions, such as whether you meet the results test or receive 80% or more of your PSI from one source, to work out whether the rules apply to you.

Business losses

A loss from your business cannot always be used to reduce your other income, such as your salary. The non-commercial loss rules may require the loss to be deferred until the business makes a profit. Get advice before you claim a business loss against other income.

GST and BAS

You must register for GST once your business turnover reaches $75,000 a year. Rideshare and taxi drivers must register for GST regardless of turnover. Once registered, you lodge business activity statements and report GST separately from your income tax. Our BAS preparation and lodgement service keeps this on track.

When is a sole trader tax return due?

If you lodge yourself, your tax return is generally due by 31 October after the end of the financial year. If you are on a registered tax agent’s client list before that date, you may have a later due date under the tax agent lodgment program. Lodging late without an agent can lead to penalties, so engage a tax agent early if you need more time.

Records to keep

• Invoices and sales records
• Receipts for expenses
• Bank statements for your business account
• A logbook if you claim car expenses using the logbook method
• Records of how you worked out business-use percentages

Keep your records for five years from the date you lodge your return. Good bookkeeping throughout the year makes tax time faster and cheaper.

Frequently asked questions

Do sole traders lodge a separate business tax return?

No. Sole traders report business income and expenses in their individual tax return, using the business and professional items section.

Do I pay tax on my business turnover or my profit?

You pay tax on your taxable profit, which is your business income less allowable deductions, added to any other income you earned during the year.

Can I use myTax as a sole trader?

Yes, myTax includes a section for sole trader and business income. However, PSI, losses, depreciation and GST make sole trader returns more complex than a wage earner’s return, so many sole traders use a registered tax agent.

Get your sole trader tax return done properly

Kennedy Tax & Business Services prepares sole trader tax returns for tradies, contractors, drivers and small business owners across Melbourne’s west. See our income tax return preparation service or contact our Footscray or Williams Landing office to book an appointment.

Related small business guides

• Instant asset write-off 2026-27: the $20,000 threshold is now permanent
• Payday super: what employers must do from 1 July 2026
• Company tax return due dates and rates
• Division 7A loans explained
• Partnership tax return guide
• Small business CGT concessions and the 2027 CGT changes
• Family trust distributions: the 30 June rules
• Taxable payments annual report (TPAR)
• Independent NDIS support workers: ABN, tax, GST and super

This article is general information only and does not take into account your personal circumstances. Speak to a registered tax agent before acting on it.

If you are self-employed and receive a Centrelink payment, sooner or later Services Australia will ask you for a profit and loss statement. Getting it right matters: your business figures are used to work out your payment rate, and an inaccurate statement can lead to an underpayment or a debt later. This guide explains what the Centrelink profit and loss statement is, who needs one, and how to prepare it properly.

What is the Centrelink profit and loss statement (SU580)?

The Profit and Loss Statement is a Services Australia form, numbered SU580. You use it to tell Centrelink about a new job or business, or about a change in your business activity or self-employment income. It sets out the income your business earned and the expenses it incurred, so Centrelink can work out the business income that counts under the income test.

Who needs to complete one?

Services Australia asks for the SU580 from people who are:

• sole traders, including people working on an ABN
• subcontractors, such as tradies, cleaners, rideshare and delivery drivers
• partners in a business partnership

If you have not told Centrelink about your business before, you will usually also need to complete a Business details form. Businesses run through a company or trust are assessed under different rules, so check with Services Australia or your accountant before completing an SU580 for those structures.

How Centrelink uses your business figures

For payments such as JobSeeker, business income is generally not reported through your fortnightly reporting in the same way as wages. Instead, Centrelink uses the information you give about your business to estimate an annual income figure, and works out your fortnightly rate from that. This is why the profit and loss statement needs to reflect your real trading position, and why you must tell Centrelink when your business income or expenses change significantly.

What to include

Income

• All sales and fees from the business, including cash and card payments
• Payments from platforms such as Uber, DoorDash or Airtasker
• Government grants or subsidies received by the business
• Any other business income, such as commissions

Expenses

• Cost of goods or materials
• Vehicle costs used for the business, such as fuel, servicing, registration and insurance
• Phone, internet and software used for work
• Tools, equipment and supplies
• Rent, insurance and professional fees, such as accounting
• Wages paid to employees

Only include the business portion of mixed-use costs. If your car or phone is used privately as well, work out the business-use percentage and keep a record of how you calculated it. Personal living expenses, such as groceries or private rent, are never business expenses.

How to prepare an accurate statement

1. Keep business and personal money separate. A dedicated business bank account makes the statement far easier to prepare and to defend if Centrelink asks questions.
2. Match figures to your records. Every income and expense figure should trace back to bank statements, invoices, receipts or platform summaries.
3. Use the right period. Complete the statement for the period Centrelink asks for, and do not mix figures from different periods.
4. Be consistent with your tax return. Large differences between your profit and loss statement and the business income in your tax return are a common trigger for a review.
5. Update Centrelink when things change. A new contract, a lost client or a big jump in costs can all affect your payment.

Common mistakes we see

• Reporting deposits into a personal account as business income without separating out transfers and personal money
• Claiming 100% of car or phone costs that are partly private
• Leaving out platform income because it was paid into a different account
• Guessing figures instead of using records, then not updating Centrelink when actual results differ

Can an accountant prepare it for me?

Yes. Many self-employed clients ask their accountant to prepare the figures from their bookkeeping records, so the statement is accurate and matches their tax return. You remain responsible for the information you give Centrelink, so review the statement carefully before you sign and submit it.

Need help with your profit and loss statement?

Kennedy Tax & Business Services prepares profit and loss statements for sole traders, subcontractors and partnerships across Melbourne’s west. We can also keep your bookkeeping up to date so the figures are ready whenever Centrelink, a lender or the ATO asks for them. Contact our Footscray or Williams Landing office to book an appointment.

This article is general information only and does not take into account your personal circumstances. Centrelink rules differ between payments and change over time. Check the current requirements with Services Australia and speak to a registered tax agent about your situation.

When it comes to tax, too many of us want to bury our head in the sand.

Often that’s because we think it’s too hard, the rules keep changing, we already have enough life admin challenges and tax doesn’t exactly inspire excitement or joy within us.

The problem is doing your annual tax return is inevitable and, rather than paying a premium or ending up in trouble because you’ve overclaimed or haven’t submitted, it’s easier to take some simple steps now to make your life easier by June 30.

This long weekend is the perfect time to take action to sort yourself out.

Federal Budget night announced an increase in the instant asset threshold, and also an extension of which businesses could access the measure. Now the Treasury Laws Amendment (Increasing and Extending the Instant Asset Write-Off) Bill 2019 has achieved Royal Assent. (And it did so on 6 April, so your affected clients may appreciate the reminder.)

The instant asset write-off threshold increased from $25,000 to $30,000 from Budget night to 30 June 2020.

One complication (although, really it’s not that complicated) is that there will be relevant dates or periods that will have different thresholds applying. Practitioners will need to be aware of three different thresholds that could apply over one financial year (2018-19). The ATO table below is a handy reference:

The threshold applies on a per asset basis. As a result, eligible businesses can instantly write off multiple assets costing less than $30,000 that are first used, or installed ready for use, from Budget night to 30 June 2020.

The instant asset write off has also been expanded to apply to both “small businesses” (those with an aggregated annual turnover of less than $10 million) and medium sized businesses (an aggregated annual turnover of $10 million or more, but less than $50 million).

Notes for clients
The ATO points out that the entire cost of the asset must be less than the instant asset write-off threshold, irrespective of any trade-in amount. Whether the threshold is GST exclusive or inclusive will depend on your client’s GST status. For further information about GST ramifications, see this ATO web page.

In working out the amount your client can claim, they must subtract any private use proportion. The balance (that is the proportion used in earning assessable income) is generally the taxable purpose proportion. While only the taxable purpose proportion is deductible, the ATO says the entire cost of the asset must be less than the threshold.

Note that if your client later sells or disposes of an asset for which they have claimed an instant asset write-off, they will need to include the taxable purpose proportion of the amount received for the asset in their assessable income.