Sole Trading
10. Personal Income Tax
Authors: Staff Legal Eagle
Firm / Chambers:
Last updated: 23 Sep 2015
- There are several considerations to take into account for your personal income taxation when deciding whether to operate your business as a sole trader.
- Sole traders pay tax at personal taxation rates. This means that income from your business is considered to be income you earn personally and must be included on your individual tax return.
- Your business income alone or in addition to your income from other sources may push you into a higher individual tax bracket. This tax rate can often be higher than the flat rate for companies of 30%. This can result in you personally paying higher tax than you would under a company or trust structure with the additional difficulty of being unable to split income between family members for tax minimisation purposes.
- However if your business is anticipated to make an occasional loss or you obtain losses from other personal investments (such as rental properties) then having your business income attributed to you personally can allow you to offset one against the other resulting in you paying tax on a lower income amount.
View more Information on Business & Company