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Sole trader vs company tax in Australia (2026-27): 3 worked examples

Quillroo — Sat, 17 Oct 2026 08:13:07 +0000

"Companies only pay 25% tax" is a common reason sole traders think about setting up a Pty Ltd. The rate is real, but it's half the story. The profit still has to reach you, and when it does, it's taxed at your personal rates.

This article works through the 2026-27 numbers at three profit levels to show where a company saves tax and where it doesn't. Every figure was computed with the same tested logic as Quillroo's free sole trader vs company tax calculator, which reproduces the ATO's franking credit examples, so you can check them and then run your own profit.

How each structure is taxed

Sole trader. Your profit is your income. You pay income tax at the 2026-27 resident rates (15% from $18,201, 30% from $45,001, 37% from $135,001 and 45% from $190,001), less the low income tax offset (LITO) if your income is low enough, less the small business income tax offset, plus the 2% Medicare levy. The small business offset is 16% of the tax on your net small business income, capped at $1,000 a year, for businesses with aggregated turnover under $5 million. It's for sole traders and for shares of small business income from partnerships and trusts, so a company's shareholders don't get it. (ATO: Tax rates, Australian resident; Small business income tax offset.)

Company. A base rate entity pays 25% on its taxable profit: aggregated turnover under $50 million and no more than 80% of assessable income from passive sources such as rent and interest. Other companies pay 30%. (ATO: Changes to company tax rates.) A salary paid to you as director is a deduction for the company and taxable income for you. What's left after company tax can be paid to you as a franked dividend.

Franking credits. The company tax already paid comes with the dividend as a credit: at 25%, one third of the cash dividend, so a $75 dividend carries a $25 credit. You include both in your taxable income, then the credit comes off your tax. Eligible resident individuals get any excess refunded. (ATO: Franking tax offsets; Refunding excess franking credits.)

The 2026-27 Medicare levy low-income thresholds haven't been published yet. The latest single thresholds the ATO lists ($28,011 and $35,013) are labelled 2025-26, and the calculator uses them for both years. No example below is near them, so the figures aren't affected. (ATO: Medicare levy reduction for low-income earners.)

The three scenarios

Each example compares three set-ups for one resident owner with no other income:

Sole trader: all profit taxed in your hands.
Company, pay it all out: the company pays you a salary, then pays everything left after company tax as a fully franked dividend.
Company, keep the rest: same salary, but the after-tax profit stays in the company.

"Total tax" adds company tax and your personal tax. Super on the salary isn't included (see below).

Example 1: $60,000 profit, $45,000 salary

	Sole trader	Company, pay it all out	Company, keep the rest
Company tax (25% of profit after salary)	–	$3,750	$3,750
Salary to you	–	$45,000	$45,000
Fully franked dividend to you	–	$11,250	$0
Franking credit	–	$3,750	$0
Your taxable income	$60,000	$60,000	$45,000
Income tax	$8,520	$8,520	$4,020
Low income tax offset	−$100	−$100	−$325
Small business income tax offset	−$1,000	–	–
Medicare levy	$1,200	$1,200	$900
Franking credit offset	–	−$3,750	–
Your personal tax	$8,620	$5,870	$4,595
Total tax (you + company)	$8,620	$9,620	$8,345
Cash in your hands after tax	$51,380	$50,380	$40,405
Left in the company	–	–	$11,250

At this profit a company doesn't help. Paying everything out costs $1,000 more than being a sole trader, and keeping $11,250 in the company saves just $275, before ASIC fees and extra accounting.

Example 2: $120,000 profit, $60,000 salary

	Sole trader	Company, pay it all out	Company, keep the rest
Company tax (25% of profit after salary)	–	$15,000	$15,000
Salary to you	–	$60,000	$60,000
Fully franked dividend to you	–	$45,000	$0
Franking credit	–	$15,000	$0
Your taxable income	$120,000	$120,000	$60,000
Income tax	$26,520	$26,520	$8,520
Low income tax offset	$0	$0	−$100
Small business income tax offset	−$1,000	–	–
Medicare levy	$2,400	$2,400	$1,200
Franking credit offset	–	−$15,000	–
Your personal tax	$27,920	$13,920	$9,620
Total tax (you + company)	$27,920	$28,920	$24,620
Cash in your hands after tax	$92,080	$91,080	$50,380
Left in the company	–	–	$45,000

Keeping $45,000 in the company cuts this year's tax by $3,300, but you're living on $50,380 instead of $92,080.

Example 3: $200,000 profit, $100,000 salary

	Sole trader	Company, pay it all out	Company, keep the rest
Company tax (25% of profit after salary)	–	$25,000	$25,000
Salary to you	–	$100,000	$100,000
Fully franked dividend to you	–	$75,000	$0
Franking credit	–	$25,000	$0
Your taxable income	$200,000	$200,000	$100,000
Income tax	$55,870	$55,870	$20,520
Low income tax offset	$0	$0	$0
Small business income tax offset	−$1,000	–	–
Medicare levy	$4,000	$4,000	$2,000
Franking credit offset	–	−$25,000	–
Your personal tax	$58,870	$34,870	$22,520
Total tax (you + company)	$58,870	$59,870	$47,520
Cash in your hands after tax	$141,130	$140,130	$77,480
Left in the company	–	–	$75,000

Here the gap is real: $11,350 less tax this year, with $75,000 kept in the company. As a sole trader, the top slice of this profit is taxed at 37% and 45%; the company pays 25% on it instead.

The pattern: the saving is on profit you leave in the company

Profit	Sole trader	Company, pay it all out	Company, keep the rest	Saving this year	Top-up tax when paid out later*
$60,000	$8,620	$9,620	$8,345	$275	$1,275
$120,000	$27,920	$28,920	$24,620	$3,300	$4,300
$200,000	$58,870	$59,870	$47,520	$11,350	$12,350

*If the kept profit is later paid as a fully franked dividend in a year when your salary and the tax rates are the same.

Three things stand out.

Paying it all out never wins on tax here. Franking credits make the 25% company tax a prepayment of your own tax. If everything comes out to you, the total equals a sole trader's tax without the small business offset, which is why that column is exactly $1,000 higher every time. The salary/dividend split doesn't change it.
The saving comes from profit kept in the company. It has only had 25% tax paid. That helps if your personal rate is higher and you genuinely don't need the money this year, for example to fund equipment, stock or a buffer.
Most of it is a deferral. When that profit comes out as a dividend, you pay the gap between 25% and your rate that year. In the examples, the later top-up is $1,000 more than the first-year saving. It only becomes a lasting saving if you take the dividends in a year when your income, and so your rate, is lower.

The non-tax costs of a company

ASIC fees. From 1 July 2026, registering a proprietary company with share capital costs $636 and the annual review fee for a proprietary company is $342. Late payment adds a fee. (ASIC: Fee indexation; Fees for commonly lodged documents.)
Accounting and compliance. The company keeps its own books and lodges its own tax return, alongside yours, and directors have legal duties. Expect a bigger accountant's bill.
The money belongs to the company. You can't just move it to your personal account. It comes out as salary, a declared dividend or a properly documented loan.
Division 7A. Loans, payments or forgiven debts from a private company to a shareholder or their associate can be treated as an unfranked dividend, unless repaid or put under a complying loan agreement by the company's lodgment day. Paying private bills from the company account is the classic way this goes wrong. (ATO: Private company benefits – Division 7A dividends.)
Personal services income (PSI) rules. If your income is mainly a reward for your personal skills or effort (more than 50%), and you don't pass a personal services business test such as the results test, the PSI rules can attribute the company's income to you. It's taxed at your personal rates, so the company doesn't lower your tax. Contractors earning most of their income from one client are the usual case. (ATO: Personal services income; Self-assessing as a PSB.)
Super on your director salary. A director paid for their duties counts as an employee for super guarantee. Under Payday Super, from 1 July 2026 the company pays 12% of your qualifying earnings for each payday, and it must reach the fund within 7 business days (unless a longer period applies). On a $60,000 salary that's $7,200 a year: deductible to the company and yours in super, but still cash out of the business. (ATO: About Payday Super; Super guarantee.) The super guarantee calculator works out the amount.

So should you set up a company?

A company is most likely to save tax when much of your profit would otherwise be taxed at 37% or 45% (the saving is thin at 30%), you can leave a meaningful amount in the business, the PSI rules don't catch your income, and you'll keep company and personal money strictly separate. If you'd take out every dollar anyway, these numbers favour staying a sole trader: you keep the $1,000 small business offset and skip the extra costs. Trusts, asset protection and selling the business are separate questions for a registered tax agent.

If you stay a sole trader, the sole trader tax calculator shows how much to set aside, and Quillroo's paid AU GST & BAS Workbook keeps income, expenses and GST in one place.

What these figures leave out

One year, one resident owner, no other income, 25% company rate. No super, payroll tax, company running costs, Medicare levy surcharge, HELP repayments, trusts, capital gains or dividend holding period rule. The company is assumed to be new or a base rate entity last year, so it franks at 25%. (ATO: Changes to company tax rates.)

Run your own numbers: Sole trader vs company tax calculator. It runs in your browser, and nothing you type is sent anywhere.

General information, not tax advice. Your situation may differ, so check with the ATO or a registered tax agent before you change your business structure. Rates, thresholds and fees checked against ATO and ASIC pages on 17 Oct 2026. Quillroo makes the tools linked here, including the paid workbook.

Published by Quillroo, a small Australian automation studio. Questions: ledgerlinetools@proton.me

How much tax should a sole trader set aside in Australia (2026-27)? A worked example

Quillroo — Sat, 17 Oct 2026 05:09:32 +0000

As a sole trader, nobody withholds tax from your business income. Your profit is added to any other income, such as wages, and taxed at your personal rates when you lodge your return. If you haven't put money aside during the year, the whole bill arrives at once.

This article shows how to estimate that bill for 2026-27 and turn it into a simple percentage to set aside each time you're paid. The examples use the same tested logic as Quillroo's free sole trader tax calculator, so you can check them and then run your own figures.

What makes up a sole trader's tax bill

For an Australian resident for the full year who is entitled to the full tax-free threshold, four things make up most of the bill.

1. Income tax at resident rates. The 2026-27 rates are:

Taxable income	Tax on this income
0 to $18,200	Nil
$18,201 to $45,000	15c for each $1 over $18,200
$45,001 to $135,000	$4,020 plus 30c for each $1 over $45,000
$135,001 to $190,000	$31,020 plus 37c for each $1 over $135,000
$190,001 and over	$51,370 plus 45c for each $1 over $190,000

The first rate drops from 16% in 2025-26 to 15% in 2026-27, so the base amounts are lower too (in 2025-26 they were $4,288, $31,288 and $51,638). (ATO: Tax rates, Australian resident.)

2. Low income tax offset (LITO). $700 if your taxable income is $37,500 or less. Between $37,501 and $45,000 it's $700 minus 5c for every $1 over $37,500. Between $45,001 and $66,667 it's $325 minus 1.5c for every $1 over $45,000. It can reduce your tax to $0, but any unused amount isn't refunded. (ATO: Low income tax offset.)

3. Small business income tax offset (SBITO). If your business's aggregated turnover is under $5 million, the offset is 16% of the income tax on your net small business income (that income's share of your taxable income), up to $1,000 a year. Wages aren't small business income, and a business loss is treated as zero. The ATO works it out from your tax return. (ATO: Small business income tax offset.)

4. Medicare levy. 2% of taxable income. A single person pays nothing at or below $28,011 and a reduced levy up to $35,013. Those are the latest thresholds the ATO has published, and they're labelled 2025-26. The 2026-27 thresholds may be different (new thresholds are usually set in the following Budget), so the calculator uses the published figures for both years and says so. (ATO: Medicare levy reduction for low-income earners.)

Worked example 1: $50,000 business profit plus $20,000 wages (2026-27)

Taxable income: $50,000 + $20,000 = $70,000
Income tax: $4,020 + 30% × ($70,000 − $45,000) = $4,020 + $7,500 = $11,520
LITO: taxable income is above $66,667, so $0
SBITO: the business share of the tax is $11,520 × 50,000 ÷ 70,000 = $8,228.57. 16% of that is $1,316.57, which is over the cap, so the offset is $1,000
Medicare levy: 2% × $70,000 = $1,400
Total for the year: $11,520 − $0 − $1,000 + $1,400 = $11,920

How much of that comes from the business? Work out the bill on the wages alone. On $20,000, income tax is 15% × $1,800 = $270, LITO wipes it out, and there's no Medicare levy because $20,000 is under $28,011. That's $0, so the business adds the full $11,920.

Set-aside: $11,920 ÷ $50,000 = 23.84%, or about 24 cents from every dollar of profit.

Any tax your employer withheld from the wages comes off that total at tax time; the calculator has an optional field for it. For comparison, the same income in 2025-26 comes to $12,188, which is $268 more because of the old 16% first rate.

Worked example 2: $60,000 business profit, no other income (2026-27)

Taxable income: $60,000
Income tax: $4,020 + 30% × $15,000 = $8,520
LITO: $325 − 1.5% × $15,000 = $325 − $225 = $100
SBITO: all of the taxable income is business income, so 16% × $8,520 = $1,363.20, capped at $1,000
Medicare levy: 2% × $60,000 = $1,200
Total: $8,520 − $100 − $1,000 + $1,200 = $8,620

Set-aside: $8,620 ÷ $60,000 = 14.37%, about 14 cents per dollar of profit.

The two businesses earn similar profits but need very different set-aside rates. In example 1 the wages already use the tax-free threshold, so the business profit is taxed at higher rates and gets no LITO.

The $1,000 cap doesn't always apply. With $10,000 of business profit and $40,000 of wages, tax on $50,000 is $5,520, the business share is one fifth ($1,104), and the offset is 16% of that: $176.64.

A simple set-aside rule of thumb (general guidance)

Best option: run your own numbers in the sole trader tax calculator at the start of the year and whenever your income changes. Each time you're paid, move that percentage into a separate tax account. The percentage is of profit, so applying it to whole payments (excluding GST) saves a little extra, which is the safe direction.
If you haven't run the numbers yet: setting aside your top marginal rate plus 2% for the Medicare levy is a cautious starting point. For taxable income between $45,001 and $135,000 that's 30% + 2% = 32%. It usually saves more than you need, because it ignores LITO and the small business offset; example 2 needed 14.37%.
Check it each quarter when you do your BAS, and adjust if your income has moved.

This is general guidance, not an ATO rule. It doesn't cover HELP repayments, the Medicare levy surcharge or family Medicare reductions.

PAYG instalments: the ATO may collect it during the year

After you lodge a return with business income, the ATO may put you into PAYG instalments. Individuals, including sole traders, are entered automatically if their latest return shows instalment income of $4,000 or more, tax payable of $1,000 or more and estimated (notional) tax of $500 or more. Most people pay quarterly, and the instalments are credited against your tax when you lodge. You can also enter voluntarily, which the ATO suggests if you're new to business. (ATO: Starting PAYG instalments.)

Instalments are a prepayment of the same tax, not an extra tax, so your set-aside account is where they come from. If you pay using the instalment rate, the amount is your instalment income (T1) × your rate (T2). The PAYG instalment calculator does that sum.

GST is separate money

If you're registered for GST, the GST in your prices isn't your income and isn't part of the percentages above. It belongs on your BAS (one eleventh of your GST-inclusive taxable sales). You must register within 21 days of your GST turnover reaching $75,000, measured on the current 12 months or the projected next 12. (ATO: Registering for GST.) The GST registration checker runs both tests.

If you'd like income, expenses and GST tracked in one place so your profit figure is easy to find, Quillroo's paid AU GST & BAS Workbook is built for that.

What these figures leave out

The examples assume an Australian resident for the full year with the full tax-free threshold. They don't include the Medicare levy surcharge, family Medicare reductions, HELP or student loan repayments, the seniors offset, non-resident rates, or PAYG instalments already paid. A business loss is treated as $0; it reduces other income only if you meet the non-commercial loss rules.

Run your own numbers: Sole trader tax calculator (2026-27 and 2025-26). It runs in your browser, and nothing you type is sent anywhere.

General information, not tax advice. Your situation may differ, so check with the ATO or a registered tax agent. Rates and thresholds checked against ATO pages on 17 Oct 2026. Quillroo makes the tools linked here, including the paid workbook.

Published by Quillroo, a small Australian automation studio. Questions: ledgerlinetools@proton.me

Build an invoice reminder workflow in n8n with Google Sheets (idempotent, AU GST wording)

Quillroo — Fri, 16 Oct 2026 11:13:12 +0000

Flow: Schedule Trigger (daily 9am, workflow timezone set) → Google Sheets "Get rows" → Code node (decide) → Send Email (SMTP) → Google Sheets "Update row" (match on row_number).

The decision logic

Skip rows where status is paid, cancelled or on hold.
daysFromDue = today − due_date, where today is the date in the workflow timezone: $today.toFormat('yyyy-MM-dd'), not new Date().toISOString(), which gives the UTC date (at 9am in Sydney that's still yesterday, so every count comes out a day short). Accept YYYY-MM-DD and DD/MM/YYYY text plus Google Sheets serial numbers, and reject impossible dates instead of letting Date.UTC roll them over.
Stages = [−3, 0, 7, 14, 30]. Pick the highest stage whose offset ≤ daysFromDue, so downtime doesn't cause a burst of emails.
Send only if that stage's index is greater than the stored last_stage_sent index (idempotent).
Write back last_stage_sent and last_sent_date.

Gotchas we hit

Send Email v2.1 appends an n8n attribution footer by default. Turn it off under Options.
Importing with n8n import:workflow fails if the JSON has no id.
Test against a local SMTP catcher (e.g. Python aiosmtpd) before touching a real inbox.
Google Sheets can hand you a date cell as a serial number (46312 is 17 Oct 2026), depending on the Get rows node's Options → Output Formatting → Date Formatting. A five-digit number matches neither text pattern, so a reformatted column quietly drops out of the reminders. We set that option to Serial Number explicitly and convert it (snippet below).
The email goes out before last_stage_sent is written, so if Update row fails, the next run sends the same stage again. Turn on Retry On Fail for the Update row node and set an Error Workflow so you hear about it.

const todayStr = $today.toFormat('yyyy-MM-dd'); // workflow timezone, not UTC
const today = new Date(todayStr + 'T00:00:00Z');
const EPOCH = Date.UTC(1899, 11, 30); // Google Sheets / Excel day zero
const ymd = (y, m, d) => { const t = new Date(Date.UTC(y, m - 1, d));
  return t.getUTCMonth() === m - 1 && t.getUTCDate() === d ? t : null; };
function parseDate(v) {
  const s = String(v ?? '').trim(); let m;
  if (typeof v === 'number' || /^\d{5}(\.\d+)?$/.test(s)) { const n = Number(s); // Sheets serial
    return n > 20000 && n < 80000 ? new Date(EPOCH + Math.floor(n) * 86400000) : null; }
  if ((m = s.match(/^(\d{4})-(\d{1,2})-(\d{1,2})/))) return ymd(+m[1], +m[2], +m[3]);
  if ((m = s.match(/^(\d{1,2})\/(\d{1,2})\/(\d{4})$/))) return ymd(+m[3], +m[2], +m[1]); // DD/MM/YYYY
  return null;
}
const daysFromDue = due => Math.round((today - due) / 86400000);

AU GST wording

If the business is GST-registered: "Tax invoice … Total includes GST of $X", where X = total ÷ 11 rounded to the cent. Otherwise: "Invoice … No GST has been charged".

Updated 17 Oct 2026: added the timezone, serial-date and write-back notes after a reader's comment. Thank you.

Packaged version with guide, sample sheet and 5 templates: https://quillroo.gumroad.com/l/au-invoice-chaser

Published by Quillroo, a small Australian automation studio. Questions: ledgerlinetools@proton.me

NZ GST return (GST101A) boxes 5–15 explained, with 2026-27 due dates

Quillroo — Fri, 16 Oct 2026 11:08:04 +0000

NZ GST is 15%. The GST in a GST-inclusive amount = amount × 3/23 ($115 includes $15).

Box	What goes in it
5	Total sales and income for the period, including GST and zero-rated supplies
6	Zero-rated supplies included in Box 5 (usually exports)
7	Box 5 − Box 6
8	Box 7 × 3 ÷ 23
9	Adjustments (from your calculation sheet)
10	Box 8 + Box 9: total GST collected
11	Total purchases and expenses including GST (excluding imported goods)
12	Box 11 × 3 ÷ 23
13	Credit adjustments
14	Box 12 + Box 13: total GST credit
15	Difference between Box 10 and Box 14. If 10 is bigger you pay; if 14 is bigger you get a refund

(Source: IRD GST guide IR375 and the GST101A return.)

2-monthly due dates (31 March balance date)

GST returns are due on the 28th of the month after the period ends, except periods ending 30 November (due 15 January) and 31 March (due 7 May). Weekend or public holiday: next working day.

Apr–May 2026: 28 Jun 2026 (a Sunday, so Mon 29 Jun)
Jun–Jul: 28 Aug 2026
Aug–Sep: 28 Oct 2026
Oct–Nov: 15 Jan 2027
Dec–Jan: 28 Feb 2027 (a Sunday, so Mon 1 Mar)
Feb–Mar: 7 May 2027

(NZ public holidays haven't been checked against these dates.)

Do you need to register?

Yes, if your turnover was at least $60,000 in the last 12 months or will be in the next 12. (IRD: Registering for GST.)

General information, not tax advice.

Published by Quillroo, a small Australian automation studio. Questions: ledgerlinetools@proton.me

BAS G1, 1A and 1B explained for sole traders (with a worked example and FY2026-27 due dates)

Quillroo — Fri, 16 Oct 2026 11:02:50 +0000

If your GST turnover is under $10 million, you're on Simpler BAS and report just three GST labels:

G1 Total sales: all your sales for the quarter, whether taxable, GST-free or input-taxed (including exports). Tick whether the figure includes GST.
1A GST on sales: the GST in your taxable sales (taxable amount ÷ 11).
1B GST on purchases: the GST credits on business purchases. You need a tax invoice for purchases over $82.50, and only the business-use share counts.

(ATO: Instructions for completing your BAS, Step 1: Sales, Step 3: Purchases.)

Worked example (Q1, July–September 2026)

Sale	Amount	Treatment
Electrical repair	$1,320	Taxable
Tiling	$880	Taxable
Goods exported to NZ	$2,000	GST-free export

G1 = $4,200 (GST-inclusive)
1A = $1,320 ÷ 11 + $880 ÷ 11 = $120 + $80 = $200

Purchase	Amount	Business use
Materials	$440	100%
Phone	$99	60%
Laptop	$2,200	100%

1B = $40 + $5.40 + $200 = $245.40
Net: 1A − 1B = −$45.40, so you'd get a refund of about $45.

Report whole dollars, rounded down (G1 $4,200, 1A $200, 1B $245). No cents and no negative signs on the form.

FY2026-27 quarterly due dates (lodge and pay)

Quarter	Due
Q1 Jul–Sep 2026	28 Oct 2026
Q2 Oct–Dec 2026	Tue 2 Mar 2027: 28 Feb is a Sunday and Mon 1 Mar is WA Labour Day, so the ATO moves it to the next business day (aim for 1 Mar to be safe)
Q3 Jan–Mar 2027	28 Apr 2027
Q4 Apr–Jun 2027	28 Jul 2027

Lodging online may give you 2 extra weeks (not for Q2). Tax and BAS agents may have different dates. Your BAS shows your actual due date. (ATO: Due dates for lodging and paying your BAS.)

General information, not tax advice. Quillroo's GST & BAS Workbook does these calculations from your income and expense records: https://quillroo.gumroad.com/l/au-gst-bas-workbook

Published by Quillroo, a small Australian automation studio. Questions: ledgerlinetools@proton.me

Tax invoice vs invoice in Australia: what must be on it (ATO checklist)

Quillroo — Fri, 16 Oct 2026 10:56:33 +0000

Short answer: only GST-registered businesses issue tax invoices. If you're not registered, you issue an invoice with no GST on it.

When you need a tax invoice

You're registered for GST and make a taxable sale.
If a customer asks for one, you must provide it within 28 days, unless the sale is $82.50 (inc GST) or less.
Your customers need a tax invoice to claim GST credits on purchases over $82.50. (ATO: When you can claim a GST credit.)

The 7 things a tax invoice must show (sales under $1,000)

That it's intended to be a tax invoice
Your identity
Your ABN
The date it was issued
A brief description of what you sold, including quantity (if applicable) and price
The GST amount, or "Total price includes GST" if GST is exactly one-eleventh of the total
The extent to which each item is taxable

$1,000 or more: add the buyer's identity or ABN. (Source: ATO, Tax invoices, updated 18 Sep 2026: https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/tax-invoices)

Working out the GST

GST in a GST-inclusive price = price ÷ 11. $1,100 includes $100 GST. Round to the nearest cent.

If you're not GST-registered

Head it "Invoice", include your ABN, and say "No GST has been charged". You must register once your GST turnover reaches $75,000. That's tested on the current month plus the previous 11, or the projected next 12 months. (ATO: Registering for GST.)

Digital invoices are fine

A PDF emailed to the customer is a valid tax invoice if it contains everything above.

Quillroo makes small admin tools for Australian sole traders. This is general information, not tax advice.
Related: the GST & BAS Workbook works out G1, 1A and 1B from your records: https://quillroo.gumroad.com/l/au-gst-bas-workbook

Published by Quillroo, a small Australian automation studio. Questions: ledgerlinetools@proton.me

How to chase an unpaid invoice in Australia: 5 polite email templates (copy-paste)

Quillroo — Fri, 16 Oct 2026 10:55:36 +0000

Late payment is the most common cash-flow headache for sole traders. The fix is mostly boring: a consistent schedule, polite wording, and a clear invoice. This guide gives you all three.

Step 0: make sure the invoice is right

If you're registered for GST and the customer asks for a tax invoice, you must provide one within 28 days (unless the sale is $82.50 inc GST or less). A tax invoice needs: the words "Tax invoice", your identity and ABN, the issue date, what you sold (quantity and price), the GST amount (or "Total price includes GST" when GST is exactly 1/11 of the total), and how much of each item is taxable. For sales of $1,000 or more, it also needs the buyer's identity or ABN. (Source: ATO, Tax invoices, last updated 18 Sep 2026.) Not registered for GST? Call it an "Invoice" and say no GST has been charged.

The 5-step schedule

When	Tone	Goal
3 days before due	Friendly heads-up	Catch the "forgot" cases
Due date	Gentle reminder	Make it easy to pay today
+7 days	Polite overdue	Ask if there's a problem
+14 days	Firm second notice	Set a 7-day deadline
+30 days	Final notice	Mention pausing work and next steps

The templates

1. Three days before: "Hi {name}, just a quick heads-up that invoice {number} for {amount} is due on {date}. If it's already scheduled, thank you, and please ignore this email. Payment details: {BSB/account or pay link}."

2. Due date: "Hi {name}, a reminder that invoice {number} is due today. If you've already paid, thank you, and please disregard this."

3. +7 days: "Hi {name}, our records show invoice {number} is now 7 days overdue. It may simply have slipped through. Could you arrange payment, or let me know if there's an issue with the invoice?"

4. +14 days: "Hi {name}, invoice {number} for {amount} is now 14 days overdue and I haven't heard back. Please arrange payment within the next 7 days, or reply to let me know when it will be paid. If there's a problem with the work, I'm happy to discuss it."

5. +30 days: "Hi {name}, despite previous reminders, invoice {number} remains unpaid 30 days after its due date. Please pay the full amount within 7 days, or contact me today to agree a payment plan. If I don't hear from you, I may need to pause further work and consider next steps to recover the debt."

Tips that actually help

Put the payment details in every email. Every extra click delays payment.
Send from your normal email, so replies come back to you.
Keep a simple sheet: invoice, due date, last reminder sent. Stop the moment it's paid.
Don't threaten anything you won't do. This guide isn't legal advice; for debt recovery, get advice.

Want this on autopilot?

If you use n8n, the AU Invoice Chaser sends exactly this schedule from a Google Sheet, with ATO tax-invoice wording, and logs each reminder so nothing goes twice: https://quillroo.gumroad.com/l/au-invoice-chaser

Free download: these 5 templates as a PDF: https://quillroo.gumroad.com/l/payment-reminder-templates

Published by Quillroo, a small Australian automation studio. Questions: ledgerlinetools@proton.me