Guide
Posted: 
June 22, 2026

Sole traders tax aside and multiple wages income

If you're running a business as a sole trader while also earning wages from one or more employers, one of the biggest mistakes I see is not putting money aside for tax throughout the year. This often leads to a nasty surprise when your tax return is lodged.

How to manage

A simple way to manage your sole trader and wage income is:

  1. Estimate your total income for the financial year (wages + business profit) & then monitor quarterly.
  2. Use the ATO Tax Calculator or Tax Withheld Calculator to estimate your income tax liability.
  3. Divide the estimated tax liability by your total expected income (eg tax liability % income). This will give you an estimated tax percentage. Then add the Medicare Levy of 2%.
  4. This total percentage (for example 23%) is the amount you can set aside from your sole trader income into a separate tax bank account every time you receive a payment. If you're registered for GST, remember to also set aside 10% for GST.
  5. You can also ask your employer(s) to withhold your specified amount of PAYG % with a PAYG variation from your wages and choose not to claim the tax-free threshold on any of your jobs. This can help reduce the likelihood of a tax bill at the end of the financial year.

Important notes to remember

  • Tax on your wages is generally calculated by the accounting program your employer uses and it is up to you to communicate with your employer if you want the tax free threshold or you want a specific amount of tax % taken out.
  • Tax on your sole trader profit is your responsibility.
  • GST collected is not your money and should be transferred to a separate account if you're registered for GST.
  • If you stay in front or on par with what tax is owing throughout the year, the ATO may not send you PAYG Instalments, which are then required quarterly.

The goal isn't to pay more tax

The goal is to not have to pay any tax bills that cut into your cashflow suddenly. When you forecast for 12 months, this is possible.

One of the simplest habits you can create is treating tax as an expense of doing business and moving the money into a separate account every time income comes in.

Consistency removes stress.

This is general information only. Individual circumstances vary and you should seek advice specific to your situation.

Try the ATO Tax Calculator

Try it now at https://www.ato.gov.au/single-page-applications/calculatorsandtools?anchor=STC#STC/questions

Select the current year they have ie FY2024-2025 tax year.