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🔧 Contractor Tax Return — Australia

Contractor Tax — ABN, PSI & Maximum Deductions

Taxo Advisory specialises in contractor and freelancer tax returns across Australia. IT contractors, tradies, consultants, labourers — ABN income, PSI rules, PAYG instalments, deductions and the correct business structure.

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PSI rules assessed correctly ABN & GST registration help PAYG instalments managed Maximum deductions claimed

BAS Key Facts 2024–25

ABN
Required for contractors
PSI
Rules may restrict deductions
47%
Withholding without ABN
PAYG
Quarterly instalments
88c/km
Vehicle rate 2024-25
$300
Instant tool deduction
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Contractor Tax Services

Contractor Tax — Every Scenario Covered

From IT contractors to tradies, Canberra government consultants to self-employed professionals — contractor tax expertise.

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IT Contractor Tax

ABN income from software, tech and IT consulting. PSI assessment, home office, equipment and software costs, conference fees, professional development.

PSI rules assessed
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Tradie & Labourer Contractor

Tools, vehicle, protective clothing, licence fees, TAFE courses, union membership. Sub-contracting arrangements and labour hire obligations.

Tools & vehicle
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Management Consultant

ABN consulting income, home office, vehicle, professional memberships, conferences, self-education, and client entertainment where deductible.

All deductions claimed
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Healthcare Contractor

Locum doctors, agency nurses, allied health contractors. AHPRA registration, CPD, medical indemnity insurance, and travel between sites.

Healthcare specialist
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Canberra Govt Contractor

PSI rules for Commonwealth agency contractors. Security clearance costs, professional memberships, home office, sole trader or company structure.

PSI + clearances
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Construction Contractor

Labourers, scaffolders, excavator operators. Tools, PPE, vehicle, training certificates, and sub-contractor invoice management.

Construction specific

Contractor Tax Guide

PSI Rules & Contractor Tax — What You Need to Know

Personal Services Income (PSI) — The Key Rule

PSI rules affect sole traders and companies whose income predominantly comes from personal skills or efforts — which is most contractors.

  • PSI applies when more than 50% of your income comes from your personal labour, skills, or expertise
  • If PSI rules apply, certain deductions are not available including rent and associate payments
  • PSI does not apply if you pass the Results Test, 80% Rule, Unrelated Clients Test, or Employment Test
  • Many Canberra government contractors and IT contractors are subject to PSI rules

Deductions Always Available Under PSI

  • Home office expenses (67c/hour or actual cost method)
  • Tools, equipment and software directly used in earning income
  • Vehicle travel between clients or work sites
  • Professional memberships and licences
  • Self-education directly related to current contracting work
  • Income protection insurance premiums

PAYG Instalments

Once ABN income exceeds a threshold, the ATO requires quarterly prepayments of expected income tax. We review the ATO's instalment amount and vary it where it doesn't reflect your actual income for the year.

Contractor vs Employee — The ATO Distinction

The ATO has strict tests to determine whether a worker is an employee or contractor. Being incorrectly classified has significant consequences for both parties. We assess your working arrangements and advise on correct classification.

Contact Taxo Advisory

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taxo.au
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Office

Suite 11a/102 Princes Hwy, Unanderra NSW 2526

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✓ Registered BAS Agent (TPB)

Taxo Advisory is TPB registered — legally authorised to prepare and lodge BAS returns on your behalf. All Australian states serviced online at taxo.au.

How It Works

Lodge Your BAS in 4 Steps

1

Sign Up at taxo.au

Free account in minutes. Secure, ATO-approved.

2

Share Records

Upload invoices, payroll and bank data for the period.

3

We Prepare BAS

Registered agent reviews, maximises credits, checks for errors.

4

Lodged On Time

We lodge electronically with the ATO before the due date.

Common Questions

BAS Return FAQ

Yes. All independent contractors and freelancers operating a business need an ABN. Without one, businesses paying you must withhold 47% of your payments. We assist with ABN registration and ensure your contracting setup is tax-compliant.
Personal Services Income rules apply when more than 50% of your income comes from your personal labour or expertise. If PSI applies, certain business deductions are restricted. You may be exempt if you pass the Results Test (paid for a specific result, supply tools, liable for rectification), the 80% Rule (less than 80% from one client), or other tests. We assess PSI status for every contractor return.
IT contractors working predominantly for one client are typically subject to PSI rules. This means some deductions available to ordinary businesses are restricted. However, core deductions — home office, vehicle, tools, equipment, professional development — remain fully deductible. We structure your deductions correctly under PSI.
When ABN income exceeds the ATO threshold, they require quarterly prepayments of expected tax. If your income this year will be lower, you can vary the instalment down. If income is higher, varying up avoids a large bill. We review and vary instalments every quarter.
Sole trader is simpler — all income taxed at personal rates. Company structure offers the 25% rate and potential income flexibility but adds compliance costs. For contractors earning over $80,000–$100,000 profit, company structure often saves tax. However PSI rules can reduce the benefit. We model both structures for your situation.

Also Available

Other Tax Services

📋 Individual Tax Return 📋 BAS Return 🛵 Gig Economy Tax 💼 Small Business Tax 💰 Payroll & PAYG 🏢 Superannuation

Get Your Contractor Tax Done Right

PSI rules assessed. ABN income handled. Maximum deductions. All Australian states.

Lodge at taxo.au → 📞 +61 412 013 418