When you’re busy running a business, tax and super can sometimes take a back seat. However, avoiding mistakes is essential for sole traders — the ATO is paying closer attention, and errors can lead to penalties or missed deductions.
Common Sole Trader Tax Mistakes
Here are the top mistakes small business owners and sole traders often make:
- Not reporting all income – including side hustles, cash jobs, or payments in-kind (barter deals where goods or services are exchanged).
- Overclaiming expenses – such as claiming private use of assets, overstating costs of goods sold, or inflating business deductions.
- Incorrectly calculating losses – particularly when trying to offset non-commercial business losses against other income.
- Claiming PAYG withholding refunds they’re not eligible for.
- Misreporting personal services income (PSI) to access tax benefits they’re not entitled to.
- GST issues – failing to register for GST once turnover reaches $75,000, or not registering in the taxi/ride-sourcing industry.
- Poor record keeping – not keeping accurate and complete records to support claims.
How to Stay Compliant and Stress-Free
To help sole traders stay on top of their obligations:
- Use the ATO Tax Time toolkit for small business — it has checklists and resources covering business income, deductions, and GST.
- Download the ATO app and use the myDeductions tool to track expenses as they happen.
- Improve your record-keeping skills with the free ATO course: Record Keeping: Essentials to Strengthen Your Small Business.
Final Word
Getting your tax right doesn’t need to be complicated. By avoiding these common mistakes and staying organised, sole traders can save time, reduce ATO risk, and maximise deductions. If you’d like tailored advice, our team at St George TaxCare is here to help small businesses and sole traders across Sydney with tax returns, BAS, GST, and more.