How a tax accountant for consultants usually works
Engagement starts with a review of your structure, invoicing model, software stack (e.g. Xero, MYOB, QuickBooks), current BAS/tax position and any ATO pressure. From there the work typically splits into:
- Immediate triage: fix coding errors, late BAS, PAYG instalments, or payroll gaps.
- Process design: tighten timesheets, expense capture, approvals, WIP and job costing.
- Ongoing review: monthly/quarterly checks, BAS, year‑end tax planning and pre‑lodgement reviews.
Key Australian rules consultants should watch
- PSI and PSB tests: if income is mainly from your personal efforts, deductions may be limited unless you pass a PSB test (results, unrelated clients, employment, or business premises).
- GST registration: required at $75,000 GST turnover. Exports of services can be GST‑free when criteria are met; keep evidence.
- BAS accuracy: separate GST‑free income, correctly claim input credits, and reconcile quarterly.
- PAYG instalments: ensure instalments reflect real profit, especially with variable projects.
- Super and payroll: super is 11.5% from 1 July 2024. Contractors may still need super in some cases.
- Recordkeeping: keep engagement letters, timesheets, expense receipts, mileage logs, subcontractor invoices and currency evidence for overseas work.
- Registration checks: verify your agent on the Tax Practitioners Board public register.
PSI, structure and paying yourself
The right setup balances compliance and commercial outcomes:
- PSI assessment: document PSB tests annually. This shapes what deductions you can claim and how profit is taxed.
- Structure fit: sole trader (simple), company (rate and liability benefits), trust (flexibility in some models). Changes should align with PSI, risk and growth plans.
- Remuneration: if using a company, consider a mix of salary, super and dividends with proper payroll and STP settings.
A specialist will model tax, cashflow and admin load for each option before you switch.
GST and BAS for consultants
Small coding errors create big BAS issues. Typical focus areas include:
- Overseas clients: determine GST‑free treatment, ensure correct tax codes and evidence.
- Disbursements vs on‑charges: know when GST applies on recharges to clients.
- Mixed supplies: separate taxable, GST‑free and out‑of‑scope items.
- Expenses: claim input credits for eligible purchases; apportion mixed‑use costs.
- Reconciliations: tie BAS figures to the general ledger and source documents each period.
Deductions checklist for consultants
Common deductible items when incurred for business use:
- Software and cloud subscriptions, video meeting tools, storage and security.
- Laptop, phone, peripherals, and data plans (with business-use apportionment).
- Professional indemnity insurance, training, certifications and memberships.
- Travel to clients, parking, ride-share, accommodation and meals on overnight trips.
- Marketing, website, domain, hosting, and proposal tools.
- Subcontractors and specialist advisors engaged on projects.
- Home office: method depends on facts; retain records and floorplan if needed.
Good records drive bigger, safer claims—and faster tax preparation.
Software and workflow that suit consultants
Choose tools that mirror how you deliver and bill:
- Core accounting: Xero, MYOB or QuickBooks set up with accurate chart of accounts and tax codes.
- Time and expense: integrated timesheets, receipt capture and mileage.
- Invoicing: progress billing, retainers and milestone billing connected to jobs or projects.
- Multi‑currency: handle USD/EUR invoices and FX gains/losses when working with overseas clients.
- Reporting: WIP, utilisation, effective hourly rate and job margin tracking.
Our bookkeeping for consultants and payroll for consultants pages cover setup and integrations in more detail.
What to compare before you commit
Scope
Confirm inclusions for PSI review, BAS prep and lodgement, year‑end tax, and ATO correspondence. Add-ons like bookkeeping or payroll should be explicit.
Software fit
Look for hands‑on experience with your accounting stack and time/expense tools, not just brand names.
Turnaround and communication
Agree response times, monthly/quarterly rhythms, and how urgent issues escalate around deadlines.
Commercial fit
Compare fixed fees vs hourly, meeting cadence, reporting depth, and advisory availability during project spikes.
Best next steps
Write down your top outcome: e.g. clarify PSI status, fix BAS, improve deductions, or streamline time/expense workflow.
Then shortlist providers against that outcome, not just a job title. Use these pages to go deeper before you reach out:
- Consultant Accountant — overview of consulting finance needs.
- Bookkeeping for Consultants — day‑to‑day accuracy and reporting.
- Payroll for Consultants — super, STP and contractor rules.
- Accounting Services — service hub and comparisons.
- Tax Accountant — broader tax services across industries.
Frequently asked questions
What’s different about a tax accountant for consultants?
Consultants often face PSI tests, GST on exports, time-based billing, subcontractors, and multi‑currency clients. A specialist aligns your processes and tax treatment with how you actually deliver and invoice work.
Do PSI rules apply to my consulting income?
They may. If most income is from your personal efforts and you don’t pass a PSB test, deductions can be limited and income may be attributed to you personally. A specialist will run the PSB tests and document the result each year.
Should I register for GST?
Yes when turnover reaches $75,000. Many consultants register earlier to claim input credits. Services supplied to overseas clients can be GST‑free if requirements are met—use correct tax codes and keep evidence.
What deductions can I claim?
Software, laptop/phone, professional indemnity, memberships, training, travel to clients, marketing, subcontractors and home office (method depends on facts). Keep receipts, apportion mixed‑use items and maintain logs.
Which structure is best?
It depends on risk, income, PSI position and growth plans. Sole trader is simple; companies offer rate and liability benefits; trusts add flexibility in some models. Get tailored advice before changing.
Can you also handle bookkeeping and payroll?
Yes. Many consultants prefer one coordinated provider for bookkeeping, BAS, payroll and tax so the workflow is consistent end‑to‑end.