If you run your business as a sole trader, include the business profit on your personal tax return—you don't lodge a separate company return. This guide shows the practical steps to lodge for the 2025–26 year, the dates, the numbers you need, and the traps to avoid. It covers myGov/myTax, GST and BAS rules, common deductions, record keeping, and what happens if you use a registered tax agent.

Quick reference

- The 2025–26 tax year runs from 1 July 2025 to 30 June 2026; if you're filing yourself through myTax or on paper, aim to have it done by 31 October 2026.

- The article lists simplified resident tax brackets and a 2% Medicare levy—double-check the exact 2026 rates and levy on the ATO site before relying on these figures.

- If your business turnover reaches the GST threshold, you generally need to register for GST—start the registration process at abr.gov.au.

- ABN registration: free via the Australian Business Register: https://abr.gov.au/.

- The piece states the super guarantee rises to 12% from 1 July 2025—if you employ staff, factor that rate into payroll calculations.

- PAYG instalments: the ATO may send a notice with a rate or amount to pay during the year to help meet your end‑of‑year tax bill.

- BAS (if registered for GST): lodgement frequency is usually monthly or quarterly. Quarterly BAS due dates: the BAS for each quarter is typically due by the 28th day of the month after the quarter ends (for example, the Sep quarter BAS is due 28 October).

- Keep all business records—invoices, receipts and bank statements—for at least five years after you lodge your return, so you can substantiate any claims.

Prerequisites — what you need before you start

1. An active myGov account linked to the Australian Taxation Office (ATO). Sign up or sign in at https://my.gov.au/ and link ATO to access myTax.

2. Australian Business Number (ABN). If you trade under a business name or invoice clients, an ABN is essential — apply free at https://abr.gov.au/.

3. Records: sales invoices, bank transaction exports, merchant terminal summaries (EFTPOS/Stripe/PayPal fees and gross takings), receipts for purchases, expense claims, and details of cash sales.

If you're GST-registered, keep tax invoices for sales $82.50 (inc. GST) or more.

4. BAS and PAYG details: copies of lodged BAS statements, PAYG withholding summaries for employees, and instalment notices received from the ATO during 2025–26.

5. Superannuation records: employer contributions for any staff, and any personal super contributions you plan to claim as a deduction.

6. Accounting exports: if you use software like Xero, QuickBooks or MYOB, export your Profit & Loss (P&L) and Balance Sheet for 1 July 2025–30 June 2026. If you use spreadsheets, make sure totals reconcile to your bank statements.

7. Knowledge of specific deduction methods you’ll use, for example motor vehicle claims (cents-per-kilometre or logbook method), home-office calculations (fixed-rate or actual-cost methods), and depreciation for assets.

Step-by-step: lodge your tax return as a sole trader

Work through the steps below — they apply whether you run your business part-time, full-time or solo.

Step 1 — Confirm legal status and registrations

Mastheads

Check your ABN is active and your business name registration is current. If your GST turnover was $75,000 or more in 2025–26, ensure you’re registered for GST and that your GST reporting frequency (monthly, quarterly or annually) is set correctly with the ATO. If you employ staff, confirm PAYG withholding is registered and payroll systems are up to date.

Step 2 — Gather and reconcile records

Export bank statements and merchant reports for the full tax year. Reconcile totals: sales should equal deposits minus known platform fees and refunds. Match invoices to payments and note any bad debts you want to write off. For cash transactions, group them by month and keep supporting receipts.

Step 3 — Calculate business income

Total your gross business income for the year — include cash, digital payments, barter transactions and any other business receipts. If you received government grants or COVID-related or disaster payments during the year, treat them according to ATO guidance — some are assessable, others tax-free; link at https://www.ato.gov.au/.

Step 4 — Work out allowable deductions

Frankly, common deductions: cost of goods sold, motor vehicle expenses, travel, home-office expenses, tools and equipment, accounting and legal fees, phone and internet (business portion only), business insurance, rent for business premises, lease costs, and advertising. For large assets, use depreciation rules or small business pooling. Keep precise records and allocate business vs private use — for example, if your phone is 70% business use, claim 70% of the bill.

Step 5 — Complete the business and professional items in myTax

Log into myGov, open the ATO service, and start myTax. Open myTax and enter your net business profit or loss in the business and professional section; if you're registered for GST, follow the prompts to include GST details. You’ll need to complete the business schedule that forms part of your individual return. If you lodge a paper return, include the business schedule and attach required worksheets.

Step 6 — Include PAYG instalments and tax offsets

If you paid PAYG instalments during the year, enter these amounts to reduce your final tax payable. Also include any tax offsets or credits you’re eligible for — for example, low-income tax offset if applicable, franking credits, or foreign income tax offsets. Enter spouse or dependent details where required for certain offsets.

Step 7 — Check GST, BAS and super obligations

If you’re GST-registered, ensure GST collected and GST credits claimed are reconciled with your BAS statements. If you employ staff, confirm Super Guarantee payments were made at 12% on ordinary time earnings and that you have payment records. Late or missing super can trigger charges and interest.

Step 8 — Review and lodge

Use myTax’s checks, then lodge. If you prefer a tax agent, you must engage them and have them register you on their client list by 31 October 2026 to qualify for most agent lodgement extensions. Keep a copy of your return and all supporting records for at least five years from the date you lodge.

Tips for an easier lodgement

- Start early. Reconcile bank statements monthly so year‑end work is light. Late-night scrambles increase errors.

- Use accounting software and connect bank feeds to reduce manual entry. Most software can produce P&L and GST reports you can export straight into discussions with your tax agent.

- Keep a simple expense tracking habit: photograph receipts daily and store them in one folder or cloud location with date and purpose noted.

- If you work from home, choose the method that gives the best legitimate result: fixed-rate per hour (simple) or actual cost (more paperwork but can be higher if you used air‑conditioning and a dedicated space).

- For motor claims, keep a logbook for 12 continuous weeks to support the logbook method — it’s valid for five years if business use remains similar.

- If your turnover is close to $75,000, check GST turnover rules carefully — ordinary business income plus connected entities’ turnover may push you over the threshold.

Common mistakes to avoid

- Mixing personal and business receipts. Keep separate bank accounts where possible. If you use one account, tag transactions as business or personal at the time.

- Overclaiming private expenses. If a purchase is partly private, claim only the business portion and keep notes explaining how you calculated that percentage.

- Forgetting to include platform income. Payments received through marketplaces, gig platforms or peer-to-peer apps can be taxable. Check platform summaries and include them in gross receipts.

- Not reconciling GST. If you claim GST credits, make sure you have valid tax invoices and that your BAS matches the GST reported on your tax return.

- Missing lodgement dates. If you expect to use a tax agent, contact one and register with them before 31 October 2026 to access later deadlines; if you miss that, penalties and interest may apply.

- Failing to keep records for five years. The ATO can ask for evidence of claims — if you don’t have it, your claims may be disallowed and you could owe tax plus interest.

- Ignoring super obligations. If you employ people and don’t pay the Super Guarantee on time, you’ll face charges and shortfall notices.

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If you're a sole trader for 2025–26, treat your tax return as both personal and business paperwork: lodge your individual return with the business schedule by 31 October 2026 unless you use a registered tax agent and are on their client list by that date for an extended deadline. Keep detailed records for five years, stay on top of GST and PAYG obligations, and use myGov/myTax or an agent to avoid mistakes.

This article was created with AI assistance.