Freelancer Tax in Australia: ABN, GST, BAS & PAYG (2026)

Every Australian freelancer needs an Australian Business Number (ABN) — an 11-digit identifier issued by the Australian Business Register (ABR). Without one, clients are legally required to withhold tax at the top marginal rate (47%) from your payments under the "no ABN" withholding rule.

An ABN is free, takes about 15 minutes to apply for online at abr.gov.au, and you can apply for GST registration at the same time if you're at or near the $75,000 threshold.

A sole trader uses their personal TFN (Tax File Number) for income tax — the ABN sits alongside it as your business identifier. You report business income on the Business and professional items schedule inside your individual tax return.

GST registration becomes compulsory once your GST turnover reaches $75,000 AUD (or $150,000 for non-profits) in a 12-month period.

The ATO uses two tests and you must register if either one is met:

• Current GST turnover: total sales for the current month + previous 11 months
• Projected GST turnover: estimated sales for the current month + next 11 months

GST turnover is gross sales (excluding GST itself), not profit, and includes both taxable and GST-free sales.

Once you cross the threshold you must register within 21 days. Below $75,000 you can register voluntarily — useful if you have significant GST-bearing business expenses, but it locks you into BAS reporting for at least 12 months.

If you're GST-registered, every invoice for a taxable sale must be a tax invoice with these fields:

• The words "Tax invoice" stated prominently
• Your business name (or trading name) and your ABN
• Date of issue
• A description of each item, including quantity and price
• The GST amount payable, shown either as a separate line OR with a statement "Total price includes GST"
• The extent to which each sale is taxable (where you mix taxable and GST-free items)

For invoices of $1,000 or more (incl. GST) you must also include:

• The buyer's identity (name) or their ABN
• The exact dollar amount of GST payable ("includes GST" alone is not enough)

If you're not GST-registered, your document is a regular invoice — don't write "tax invoice" and don't show a GST line.

Once you're GST-registered, the ATO assigns a BAS reporting cycle — quarterly by default for most sole traders.

Standard quarterly due dates:

• Q1 (Jul–Sep): 28 October
• Q2 (Oct–Dec): 28 February
• Q3 (Jan–Mar): 28 April
• Q4 (Apr–Jun): 28 July

Lodging through a registered BAS or tax agent typically gives you a four-week extension on each deadline.

On the BAS you report:

• G1 — total sales (incl. GST)
• 1A — GST you collected from customers
• 1B — GST credits on business purchases (input tax credits)
• PAYG installments (if applicable) and PAYG withholding (if you employ staff)

The difference between 1A and 1B is what you owe the ATO (or get refunded).

After your first sole-trader tax return, if you owed more than $1,000 in tax on business income, the ATO will enrol you in PAYG installments — a system that spreads your annual tax bill across quarterly pre-payments.

The ATO calculates an installment rate based on your prior return and sends you a notice each quarter. You can either:

• Pay the ATO-calculated installment amount, or
• Apply your installment rate to your actual quarterly income (better if income fluctuates)

PAYG installment due dates align with BAS quarters (28 Oct, 28 Feb, 28 Apr, 28 Jul) and are reported on the same BAS form.

PAYG installments are not extra tax — they're credited against your annual tax liability when you lodge your individual return. Under-pay across the year and you'll owe a top-up at lodgement.

Sole traders report business income inside their individual tax return — there's no separate business return.

Key deadlines for the 2025–26 financial year (ending 30 June 2026):

• 31 October 2026 — individual return due if you lodge yourself
• Lodging through a registered tax agent typically extends this into March or May 2027, depending on your prior compliance
• 28 February 2027 — Q2 BAS for Oct–Dec 2026 (covers Christmas trade)

Australia's individual income tax brackets are progressive, ranging from 0% (up to $18,200 tax-free threshold) to 45% on income over $190,000. The 2% Medicare Levy applies on top of income tax for most residents, and a Medicare Levy Surcharge may apply if you don't hold private hospital cover above certain income thresholds.

Mistake 1: Trading without an ABN. Clients must withhold 47% from your payments if you can't quote an ABN. Get one before you send your first invoice — it's free.

Mistake 2: Treating GST collected as income. The 10% you collect belongs to the ATO. Move it to a separate "GST" bank account on the day each invoice is paid.

Mistake 3: Forgetting the buyer's name on invoices over $1,000. The ATO can deny your client's GST credit if the invoice is missing the recipient name/ABN — they will ask you to reissue it.

Mistake 4: Ignoring PAYG installment notices. Ignoring a quarterly notice doesn't make it go away. The ATO will catch up at lodgement and charge general interest charge (GIC) on the shortfall.