As a sole trader, tax time can bring worries. Small mistakes cost money. With some planning you can avoid errors, improve your return, reduce stress. Use these tips from the Australian Taxation Office to stay sharp this tax season.
Common Mistakes to Avoid
-
Not reporting all income
Include every source of money. That means income outside your main business, cash jobs, barter or goods/services you receive. The ATO requires full disclosure. -
Over-claiming expenses
Only claim business costs, not personal use. Be realistic about cost of goods sold. Don’t overstate what you spend. -
Incorrect business losses treatment
Losses must comply with non-commercial loss rules. You can’t always offset losses against other income. Get the rules right. -
Claiming PAYG withholding refunds
Ensure you are eligible. Only claim refunds when the law allows. -
Misreporting Personal Services Income (PSI)
PSI has specific rules. Incorrect reporting can lead to missing out on tax-benefits or running afoul of regulations. -
Failing to register for GST when required
If your turnover (or expected turnover) crosses the GST threshold, or in certain industries (e.g. ride-sharing), you must register. -
Poor record keeping
Not keeping accurate, complete records makes mistakes likely. Without proper receipts, logs, documentation you may lose deductions or face penalties.
How to Get It Right
-
Use the Tax Time toolkit from the ATO. It covers deductions, business income, record keeping.
-
Use the myDeductions tool (via the ATO app) to log expenses as they happen.
-
If you’re unsure about what needs to be recorded, take ATO’s free online course “Essentials: Record keeping”.
Security & Staying Updated
-
If you lodge via ATO online services, now’s a good time to check your account security. Use myID via myGov when possible.
-
Subscribe to small business updates from the ATO so you’re aware of rule changes, due dates, and tools.
What RG Partners Can Do for You
At RG Partners we help sole traders avoid these pitfalls. We offer:
-
Review of your income sources to make sure nothing is missed.
-
Guidance on expense claims and losses, to ensure compliance with ATO rules.
-
Record-keeping systems that integrate with apps and software.
-
Advice around GST registration and when it applies.
-
Support with tax lodgement and deferring risk from misreporting.
If you’d like help preparing for tax time, or want to ensure your reporting is solid, contact us. We’ll guide you through every step so you lodge with confidence.
Reference: Australian Taxation Office
