Are you self employed as a sole trader? Then we’ve written this blog for you.

Sole trader tax return – what you need to know  

Your tax returns are a little different to most individuals – in that you can choose from a huge range of deductions to claim, but in the end, you will likely have a payable tax bill. The good news is, you can still book in with our Online Tax Shop and in a few simple steps you will be on your way to lodging your tax return. 

Our job at MMA is to maximise your deductions and reduce the amount of tax you need to pay. We are experienced at helping to ensure your business has the financial building blocks to grow and prosper – and this includes helping you manage your tax returns.

Sole trader tax returns – what you need to know

Many of the costs that you incur from running your sole trader business can be claimed as a tax deduction.

Yet, many sole traders miss out on expense claims because they aren’t up to date with the latest eligibility details from the Australian Tax Office (ATO) – and who can blame you – that’s not your job. It is however, our job to know!

Let’s take a closer look at what you can claim and how to reduce your tax bill.

First, let’s define the difference between sole traders and other businesses.

Simply put, as a sole trader you are still required to lodge an individual tax return. You report your business income in your personal tax return, and you will pay tax at the individual income rate. The amount of tax you pay depends on whether you fall below the tax threshold and also on the deductions you can claim.

Your situation is different to that of companies, who are taxed as a separate entity, and have no tax free threshold.

Claiming deductions as a sole trader

Sole trader tax return – what you need to know about deductions:

1. Operating Expenses
Expenses that occur as a result of running your business can usually be claimed, either in full or as part of a percentage. Think about:

• home office supplies (stationery, printer ink and paper)
• home office equipment (computers, printers, furniture)
• utilities and services (internet, aircon, electricity, gas and telephone)
• repairs or cleaning costs

For expenses under $300 you do not need to produce a receipt, but it’s helpful to keep record of all your expenses to help you at tax time.

2. Superannuation Fund Contributions
This is a big one. If you’re self-employed as a sole trader, you don’t actually have to pay super guarantee for yourself.

However, if your business is your one and only ‘job’ you will not be receiving super payments from anywhere else and relying only on the Age pension for support in your retirement might lead to a unpleasant shock when you realise the shortfall of the pension compared to what you are currently used to living on.

Therefore, many sole traders do choose to make personal super contributions to save for their retirement. The good news is that you can contribute as much as $25,000 as a sole trader tax deduction.

Not paying your own superannuation is a form of cheating yourself out of future earnings and lowering your own value in the business.

It is better to make small, regular amounts of contributions to your super fund now and start earning cumulative interest.

3. Professional memberships
If you pay for memberships to a professional body, or attend events related to your work, these costs can be claimed as a deduction.

As long as you have spent the money yourself and weren’t reimbursed, and the expenses directly relate to your work, then you can claim a percentage of the costs.

4. Marketing costs
Marketing expenses and advertising costs might include things such as social media paid campaigns, investing in SEO , paying for ads, directory listing fees, and outsourcing costs such as engaging a copywriter or marketing expert.

5. Travel expenses
If you travel for work – say to client or to a project site – then you can claim a percentage of petrol costs and car costs.

In summary, knowing what you can – and can’t – claim is a crucial part of maximising your tax return as a sole trader. We all know we need to pay tax as part of community, however there is no need to pay more than you need to.

You need to focus on maximising your profit and reducing your tax bill. That is why we are here – to help you. The good news is, you can still book in with our Online Tax Shop and in a few simple steps you will be on your way to lodging your tax return. And remember you can also claim the cost of your tax return lodgement as a deduction too!

Ready to roll with your 2021-2022 SOLE TRADER tax return?

You can now get your 2022 tax return lodged by a local Murwillumbah accountant to maximise your tax return and get peace of mind knowing you’re compliant with the ATO.

Here are your two options:

Complete our easy online form and get one of our local accountants to complete your tax return in 3 business days* (pending all information being supplied and queries responded to)

Or

Book an online appointment with one of our local accountants to get your tax done from the comfort of your home.

We can help you – simply contact us today 

At MMA, we specialise in helping sole traders and individuals across Tweed Heads, Northern NSW and beyond to maximise their tax returns.

Are you ready to get your 2022 lodged by a local Murwillumbah accountant to maximise your tax return and get peace of mind knowing you’re compliant with the ATO?

Simply book your session below.