Freelancing gives you flexibility, but it also makes you responsible for the full weight of running a business. That includes the taxes. For Australian freelancers, this means they have to manage income tax, track deductions, and keep pace with goods and services tax (GST) thresholds. Below is a detailed guide on how freelancer taxes in Australia work and how to stay compliant.

What’s in this article?

• What taxes are freelancers responsible for in Australia?
  
• When do freelancers need to apply for an Australian Business Number (ABN)?
  
• How do freelancers know if they need to register for GST?
  
• What are common tax mistakes freelancers make and how can they avoid them?
  

What taxes are freelancers responsible for in Australia?

In Australia, the main types of taxes freelancers are responsible for are income tax and GST. Here’s a closer look at each one.

Income tax

Your freelance earnings are treated as business income and taxed after any expenses are deducted. Unlike with employees, no tax is withheld from your payments so you’ll need to budget for it yourself.

If you owe 1,000 Australian dollars (AUD) or more in tax, the Australian Taxation Office (ATO) will automatically put you on a pay-as-you-go (PAYG) installment plan. These quarterly payments spread out your tax liability across the year and help you avoid surprises come tax time.

GST

If you earn 75,000 AUD or more in a 12-month period from your freelance work, you’re required to register for GST. Once you’re registered, you’ll add 10% GST to your invoices, lodge business activity statements (BAS), and pass that collected GST to the ATO. You can also claim GST credits on eligible business purchases.

When do freelancers need to apply for an Australian Business Number (ABN)?

The moment your freelancing shifts from a hobby to something you’re doing with consistency, structure, or the intent to generate profit, you’re operating as a business in the eyes of the ATO. That means you need an ABN.

You need to apply for an ABN once you’re:

• Earning income from your freelance work, not just covering costs

• Marketing your business services

• Issuing client invoices

• Planning to reinvest in your business

Getting an ABN is a foundational step that affects how you get paid, how you interact with clients, and how you meet your tax obligations. It’s also a signal—to clients, the ATO, and yourself—that you’re running a business.

Not having an ABN can cause problems when you invoice clients. If you issue an invoice to a business for goods or services over 75 AUD (excluding GST) without providing an ABN, your client is usually required to withhold tax from the payment and pay it to the ATO. This withholding defaults to the top tax rate, which means you could end up receiving less money than you’re really owed.

If you’re consistently freelancing, not having an ABN makes it harder to get paid, operate, and stay compliant.

How do you apply for an ABN?

Applying for an ABN is free and can be done entirely online through the Australian Business Register website. You’ll need to describe the nature of your business activities and your estimated annual turnover.

Once you’re approved, your ABN becomes your official business identifier. You’ll use it on invoices, tax forms, and your BAS submissions. If you’re using a modern invoicing tool like Stripe Invoicing, you can store your ABN and automatically include it on every invoice you send. That minimizes manual errors and saves you time.

How do freelancers know if they need to register for GST?

If your freelance business earns 75,000 AUD or more in gross income, you’re required to register for GST within 21 days of exceeding the threshold.

Once you’re registered, you’ll need to:

• Add 10% GST to your invoices

• Lodge a BAS (usually quarterly)

• Remit the GST you’ve collected, minus any GST you’ve paid on eligible business expenses

The ATO expects you to monitor your revenue. If you wait longer than 21 days after you’ve exceeded the threshold, you’ll still be responsible for backdated GST on all invoices from the point you should have registered, even if you didn’t collect it. That can quickly decrease your profit margin.

The easiest way to stay ahead of this is to track your cumulative income. Use your accounting software or your payments platform to monitor your rolling 12-month total. If you invoice through Stripe, for example, you can see real-time revenue data in the Stripe Dashboard. Once you’re registered, Stripe can also automatically apply GST to your invoices.

There are a few exceptions to the 75,000 AUD threshold, including the following:

• If you provide taxi or rideshare services (including through platforms such as Uber), you must register for GST from your first dollar earned.

• Nonprofits can wait until they earn 150,000 AUD before registering.

Should you register voluntarily?

If your income is under 75,000 AUD, you’re not required to register. But you can choose to. Voluntary registration lets you claim GST credits on your business expenses. That can be helpful if you have high setup costs or work with GST-registered suppliers.

Registration also means you’ll need to charge GST on your invoices, which can make your pricing less competitive if you work with customers. If your client base is mostly businesses that can reclaim GST anyway, the added 10% might not be an issue.

What are common tax mistakes freelancers make and how can they avoid them?

Even experienced freelancers make tax mistakes. The good news is that most mistakes are avoidable with a few systems in place. Here’s what tends to go wrong and how to keep things on track.

Keeping insufficient records

Missing receipts, vague expense tracking, and bundled bank transactions make it harder to claim legitimate deductions—or worse, leave you unprepared if the ATO asks for evidence.

Use a dedicated business bank account and payments platform to isolate income and expenses, and digitally store scanned or photographed receipts as you go. Track mileage, hours, and any other usage logs you’ll need to substantiate claims. Stripe Payments automatically logs every payment and fee in one place, which simplifies reconciliation and recordkeeping at tax time.

Missing lodgment deadlines

Due dates for income tax returns or BAS can sneak up on you, especially if you don’t have a tax agent. The ATO charges late lodgment penalties that increase over time, and repeated lateness can draw extra scrutiny.

Set calendar reminders with buffer time. If you’re using a tax agent, register with them early in the year to access extended deadlines.

Overclaiming deductions

It’s common to overestimate the business use of shared expenses (e.g., claiming 100% of your phone bill when only half of it is for work). This can be a warning sign for the ATO.

Be honest and realistic about how you use mixed-purpose items. Keep short usage logs to back up your estimates (e.g., a four-week diary for phone or internet use). Don’t rely on guesswork. If you can’t substantiate the claim, don’t make it.

Ignoring GST obligations

Some freelancers don’t notice when they exceed the 75,000 AUD income threshold. That creates a liability to the ATO for GST you should’ve collected, even if you didn’t invoice for it.

Check your cumulative annual revenue each month, register for GST as soon as you expect to exceed the threshold, and use invoicing tools that help you include GST correctly.

Not setting aside tax money

Without PAYG withholding, freelancers need to save for their own tax bills. If you don’t, you can end up scrambling when it’s time to pay.

Treat tax like a business cost: for every invoice paid, move a portion into a separate account. Don’t touch your GST collections—those belong to the ATO. Use your quarterly BAS, accountant, or both to forecast how much tax you’ll owe so there are no surprises.

Not seeking professional advice

Trying to do your taxes yourself in complex scenarios, such as working across borders and mixing employee and freelance income, can lead to missed opportunities for deductions or costly errors.

When your situation gets more complicated, bring in a registered tax agent, treat their fee as a deductible business expense, and use their advice to build better systems in the future.