Tax season can be a particularly laborious, complicated and tedious time for most people, but an extra chore for sole traders who have to handle their own paperwork. Research from Hnry, an Australasian digital accounting service for sole traders, shows that the average independent earner spends eight hours and $1000 preparing their tax return, alongside seven hours every week on financial admin – with many procrastinating until the last minute.
With the tax return deadline just one month away (31 October if self-lodged), Hnry shares five common mistakes that creative sole trader Aussies often make:
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1. Not knowing important dates
1 July 2023 to 30 June 2024. This is the 2023/24 financial year covered by the upcoming tax return. Any deductible business expenses must be from within this period.
1 July 2024 is the beginning of the new 2024/25 financial year. Any expenses incurred after this will have to be lodged in next year’s tax return.
31 October 2024 is the tax return due date if you’re lodging it by yourself.
15 May 2025 is the tax return due date if you’re lodging through a tax agent/accountant.
2. Miscalculating income and tax owed
If you have multiple income streams it can be particularly tricky to figure out exactly how much tax to set aside and this could result in an unexpected tax bill. Tax calculators designed specifically for sole traders can help you overcome this problem.
Read: 29 things you should not forget to claim at tax time
3. Missing out on claimable tax deductions
Thousands of dollars may be lost if you don’t claim legitimate expenses, so familiarise yourself with eligible deductions – such as home office costs, travel and professional development – to maximise your refund.
4. Forgetting your super
If you’re a sole trader who has made concessional superannuation contributions each year, you could claim these as a tax deduction – another way to reduce the amount of tax you pay in your return.
Read: Lesser known tax deductions for creative freelancers
5. Not claiming all your vehicle expenses
If you travelled less than 5000 kilometres for business in your car, you could claim a fixed amount per kilometre. This only applies to vehicles under one tonne and holding fewer than nine passengers, so do your research to see if you’re eligible.
