Guide
How Much Tax Should I Save as a Sole Trader in Australia?
If you're an Australian sole trader, putting aside a fixed percentage of every invoice is the simplest way to avoid a tax-time shock. Here is the plain-English version of how much, how to calculate it for your income, and where to park it.
In this guide
- Start with 30% of every invoice as a safe baseline for most sole traders.
- Add another 10% on top for GST if you're registered.
- Add 12% for super if you want a real retirement balance.
Last updated
30 April 2026
Category
GST & Tax
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Guide
Why a flat percentage works better than calculating each invoice
Australian income tax brackets change with every dollar you earn, and most sole trader income arrives unevenly. Trying to calculate the exact tax on each invoice is a waste of time — you'll over-shoot or under-shoot.
The simpler workflow that actually gets done: pick a flat percentage based on your expected annual profit, set up an automatic transfer of that percentage to a separate savings account every time an invoice lands, and reconcile annually. You'll never miss a tax payment, and any over-saving becomes a windfall in July.
Rules of thumb by profit level
These percentages assume you have no other PAYG income and are claiming standard business deductions. They include income tax and Medicare levy but exclude GST and super.
Income tax + Medicare set-aside (% of net invoice)
- Under $45k expected annual profit: 15-20% per invoice.
- $45k - $75k expected profit: 22-25% per invoice.
- $75k - $120k expected profit: 27-30% per invoice.
- $120k - $180k expected profit: 30-35% per invoice.
- $180k - $250k expected profit: 35-40% per invoice.
- Above $250k: 40%+ per invoice (you're in the top bracket).
If in doubt, save more not less. The worst case is you have a surprise refund at tax time. The bad case is you under-save and have to pay months of back-owed tax in one hit.
Add 10% on top if you're registered for GST
GST is separate from income tax. If you're GST-registered (turnover ≥ $75k), you charge 10% on every taxable invoice and must remit it to the ATO via your BAS — usually quarterly.
Treat GST as money that was never yours. The cleanest approach: split every payment into 1/11th to a GST savings account, and 10/11ths into your normal business operating account. Then your income tax set-aside is calculated on the GST-exclusive amount only.
- GST-inclusive invoice = (sale + 10%). Example: $1,100 = $1,000 sale + $100 GST.
- Split the $1,100 payment: $100 to GST savings, $1,000 to operating.
- Apply your income tax % (e.g. 30%) to the $1,000, not the $1,100.
Add 12% for super if you want a retirement balance
Sole traders aren't legally required to pay super to themselves — but if you don't, you arrive at retirement with whatever you saved separately. The compulsory super rate for AU employees is 12% (as of July 2025), and most financial planners suggest sole traders match that for parity.
Personal super contributions are tax-deductible up to the concessional cap ($30,000 in 2025-26), so contributions also reduce your income tax bill. Double benefit.
- Set aside 12% of every invoice for super, in addition to your tax %.
- Make the contribution to your super fund before 30 June.
- Lodge a notice of intent to claim with your super fund (required to claim the deduction).
- Claim the deduction on your tax return.
The complete set-aside example
Sole trader, GST-registered, expecting $100k annual profit.
- Invoice received: $1,100 (= $1,000 + $100 GST).
- GST set-aside: $100 (1/11th of the invoice).
- Income tax set-aside: $280 (28% of the $1,000 ex-GST amount).
- Super set-aside: $120 (12% of the $1,000 ex-GST amount).
- Total set-aside: $500.
- Operating cash that hits your everyday account: $600.
That means roughly 60c of every invoice dollar is actually spendable. That feels brutal the first quarter, but every quarter after, you'll have BAS money, super money, and tax-time money sitting in their right buckets — instead of a year-end shock.
The shortcut: services that do this automatically
If you don't trust yourself to do the manual split every time an invoice lands, services like Hnry route every dollar of your income through them, deduct the right amount of GST, income tax, and super at the source, and pay you the post-tax amount to your normal account. No discipline required.
This costs more than the DIY approach (Hnry takes 1% capped at $1,500/yr in AU), but for most sole traders the time saved + the BAS-day relief is worth it.
Important note
Use the guide as a practical reference, not as advice
This page is designed to support better commercial decisions, but it should not be treated as a substitute for professional advice.
Important note on tax set-asides
This guide gives rules of thumb for an AU sole trader's tax set-aside. It is not personalised tax advice and does not account for HECS/HELP debts, foreign income, PAYG income from a second job, investment income, or deductions specific to your business.
- The percentages here assume your sole trader income is your only income. Add ~5% if you also earn PAYG.
- If you have a HECS/HELP debt, add 1-10% depending on your income bracket.
- Confirm your actual position with the ATO or a registered tax or BAS professional before relying on these numbers for cash-flow decisions.
Related tools
Use the calculators that connect to this guide
These linked tools help you turn the ideas in the guide into a faster number check or a cleaner pricing decision.
BAS Set-Aside Calculator
Estimate how much GST to reserve from sales after GST credits on business purchases are considered.
Open calculatorGST Calculator Australia
Add or remove 10% GST from an amount so you can check quotes, invoices, and pricing quickly.
Open calculatorHourly Rate Calculator
Estimate a sustainable hourly charge from your income goal, overheads, and realistic billable time.
Open calculatorRelated guides
Keep reading
These guides cover nearby pricing, GST, staffing, or quoting questions that often sit beside the same decision.
GST Registration Threshold in Australia (2026): When You Must Register
Understand the $75,000 GST threshold, the rolling 12-month test, and when an AU sole trader or small business must register.
Check the thresholdGST on Quotes and Invoices in Australia
Keep GST-inclusive and GST-exclusive numbers straight on quotes and invoices so totals stay consistent and easier to explain.
Check GST wording