Sole trader tax return: the 31 October deadline and how to hit it

If you lodge your own tax return, it is due on 31 October. The ATO’s page on the business income tax return says exactly that, and adds the part sole traders sometimes hope is not true: if you operate as a sole trader you must lodge a return even if your income is below the tax-free threshold. There is no threshold for business income. If you carried on a business, a return is due.

That date is the same every year, so this page stays accurate whenever you read it. What changes is how much of the evening before is spent looking for receipts, and that part is decided months earlier.

General information, not tax advice. The ATO is the authority - see ato.gov.au or ask a registered tax or BAS agent.

The deadline, and who it applies to

31 October is the self-lodger’s date. It applies whether you use myTax, paper, or anything else, and whether the business made money or lost it.

Lodging through a registered tax agent works differently. The ATO’s page on lodging with a registered tax agent says most registered agents have a special lodgment program and can lodge for their clients after the usual 31 October deadline, that the due date depends on your own situation as well as on when you engage the agent, and that for a first-time or new agent, contacting them before 31 October is what puts you on that program. The concession runs through the agent’s arrangements, not through you, so the date that counts is the one your agent gives you.

Two things follow from that. Engaging an agent on 30 October is not a strategy, because the concession attaches to clients already on the list. And the same page notes agents must be registered with the Tax Practitioners Board, whose public register is where that can be checked.

What a sole trader return includes

A sole trader is not a separate legal entity, so there is no separate business return. The ATO’s income tax return page lists what a sole trader lodges: the tax return for individuals including the supplementary section, plus the business and professional items schedule for individuals.

In it you report your business income, the business deductions you claim, other income such as salary and wages, dividends and rental income, and the deductions you can claim as an individual. One line on that page is worth reading twice: you do not work out the tax yourself. The ATO calculates it when you lodge and issues an assessment showing either the amount owing or your refund, and if you have paid PAYG instalments during the year, those are automatically credited to you in that assessment. Those instalments are prepayments of the same tax the return settles, which is why a year of quarterly payments can still end in a refund.

The records to gather first

Everything below comes out of records you either kept as you went or are about to reconstruct badly. The ATO’s record keeping rules for business require most records to be kept for 5 years and produced when asked, which is the same set the return is built from.

• Income. Every invoice issued in the year, and the payments matched against them. Sequential numbering makes a missing one visible in seconds.
• Expenses. Every business purchase with its receipt or tax invoice attached, coded to a category, with the private portion already split out.
• Motor vehicle records. A logbook or the kilometres, whichever method you use, recorded at the time rather than estimated in October.
• Home office hours. A record of hours worked from home, kept contemporaneously.
• Asset purchases. Anything substantial you bought, with the date, the price and what it is used for.
• PAYG instalments paid. The amounts already sent to the ATO during the year.
• Interest, dividends and any salary income. Prefilled in most cases, but worth checking rather than assuming.

The single highest-value habit is attaching the receipt to the expense on the day of purchase. Nothing else on the list is genuinely irrecoverable in October; that one is.

Deductions people miss

A deduction has to be for the business, allowable, and not private, and where an expense is mixed you claim only the business portion and keep records to prove it. That is the ATO’s framing on its business deductions page, and it is the test everything below has to pass.

The commonly forgotten ones are small and recurring rather than exotic: bank and merchant fees on every card payment taken, software subscriptions charged monthly to a personal card, professional association and licence renewals, insurance premiums, the business share of phone and internet, tools and equipment bought in ones and twos across the year, and travel between jobs. None of these are memorable individually, which is exactly why they are missed. What they have in common is a bank line and no receipt, and a bank line alone will not carry the claim. The full treatment is in small business deductions and record keeping.

What late lodgment costs

Lodging late has its own penalty, separate from anything you owe. The ATO’s failure to lodge on time penalty page sets the base penalty at one penalty unit for every 28 days, or part of 28 days, that the document is overdue, to a maximum of 5 penalty units. The dollar value of a penalty unit is set in legislation and is indexed, so check the current figure on the ATO’s penalty units page rather than working from a number in an article. The ATO also says it notifies a penalty in writing with the reason, the amount and a payment due date at least 14 days after the notice.

The practical point is that the penalty attaches to lodging, not to paying. A return lodged on time with a bill you cannot yet pay costs less than a return not lodged at all.

If you cannot pay the bill

Lodge anyway, then deal with the amount. The ATO’s payment plans page includes an online estimator that works out an upfront amount, a manageable repayment amount and an estimate of the interest that will apply, and a general interest charge runs on anything not paid by the due date, so a shorter plan costs less than a longer one.

Making contact before the due date rather than after it is the part that changes the conversation. An unlodged return with an unanswered letter behind it is a different problem from a lodged return and a phone call.

How Apsis helps

Apsis keeps the two halves of the return in one place as they happen: invoices numbered and dated as you issue them, with the list filtering by status and flagging overdue accounts, and expenses logged with the receipt uploaded against each one, so the income and purchase records the return is built from are already assembled rather than reconstructed. Invoices and expenses with receipt upload are on the free plan, which covers 5 clients and 20 invoices a month. On the paid plan, the tax module adds an income tax estimate, so the size of the October bill is something you watch through the year rather than meet on the day.