How this works for contractors
A contractor-focused process starts with a fast health check: ABN/GST status, structure (sole trader, company, trust), software, income type and any ATO pressure (late BAS, tax debt, payment plans). From there the work typically runs in three layers:
1) Immediate triage: lodge overdue BAS/tax, stabilise cash flow, set up or fix ABN/GST/PAYG, and create a simple receipt capture workflow (Xero, QuickBooks, MYOB + receipt apps).
2) Process design: align invoices, expenses, mileage/logbooks, super, and subcontractor payments; test PSI/PSB; confirm if TPAR applies; map a realistic lodgement calendar.
3) Ongoing review: monthly or quarterly check-ins, BAS lodgements, PAYG instalment tuning, year‑end tax return and a quick pre‑EOFY review to lock in deductions and avoid surprises.
What a contractor tax accountant can handle
- ABN, GST and PAYG registrations, plus ATO linking and portal setup.
- Quarterly BAS and PAYG instalments calculated from clean data.
- TPAR preparation and lodgement if you pay other contractors in reportable industries (building and construction, cleaning, courier and road freight, IT, security).
- PSI assessment and PSB tests, with guidance on compliant deductions.
- Expense capture for tools, equipment, protective gear, vehicle and travel, insurances, training, memberships and home office apportionment.
- Year‑end contractor tax return with schedules and depreciation.
- Simple payroll or STP if you employ staff, or support for subcontractor onboarding and ABN checks.
Australian rules to keep in view
- GST: register when turnover reaches $75,000. Ride‑sourcing must register from the first dollar. BAS is due quarterly or monthly depending on registration.
- PSI: when most income is from your personal effort, PSI may limit income splitting and certain deductions unless you pass PSB tests.
- TPAR: required if you pay contractors in the ATO’s reportable industries. Your software should capture supplier ABN, name and amounts through the year.
- Super and STP: if you have employees (or contractors deemed employees), superannuation and Single Touch Payroll (STP Phase 2) obligations apply.
- Check registration: confirm your provider on the Tax Practitioners Board public register and ensure tax/BAS registrations match the work.
If you also need bookkeeping or payroll support, use our bookkeeping services and payroll services hubs to compare options, or stay on this page and request contractor‑specific tax help below.
Deductions contractors commonly claim (and what to watch)
Vehicle and travel
Logbook or cents‑per‑km method, tolls and parking linked to income earning, travel between sites where eligible. Keep clear records; private use must be excluded.
Tools and equipment
Immediate deduction or depreciation depending on thresholds and current rules. Keep invoices and note business use percentage.
Home office and communications
Phone, internet and home office claims using an accepted ATO method with evidence of business use.
Insurances and memberships
Public liability, professional indemnity, trade licences, union/professional fees and accounting fees.
Rules change (e.g., instant asset write‑off and fixed‑rate home office methods). A contractor tax accountant will confirm the right method and evidence before year‑end.
What to compare before you commit
Scope
Confirm your quote covers GST/BAS, PSI review, year‑end tax, and TPAR if relevant — plus any cleanup, software setup or catch‑up lodgements.
Software fit
Look for confident use of Xero, QuickBooks or MYOB and a clear workflow for invoices, expenses, mileage and subcontractors.
Turnaround and communication
Ask how quickly BAS and returns are turned around, how queries are handled during peak periods, and whether you’ll have a single point of contact.
Commercial fit
Compare fixed‑fee vs hourly, month‑to‑month vs annual packages, and whether you need just compliance or broader advisory/tax planning.
If your needs extend beyond tax (e.g., budgeting or cash flow), see our accounting services hub or small business accountant pages, then return here to finalise scope.
Choosing structure as a contractor
Most contractors start as a sole trader for simplicity and cost. As income, risk or hiring grows, a company or trust may make sense. Structure should be weighed against PSI/PSB rules, insurance, admin load and your long‑term plans — not just tax rate headlines.
- Sole trader: simple, low admin, personal liability, PSI often relevant.
- Company: liability protection, payroll options, director obligations, more admin.
- Trust: distribution flexibility, trustee responsibilities, needs tight records.
When structure changes, align company tax return needs, payroll/STP, super and insurances before trading under the new entity.
Best next steps
Write the outcome you need next: lodge overdue BAS, set up GST, confirm PSI, prepare for TPAR, clean up software, or finish the tax return. Shortlist providers against that outcome and confirm scope, timing and price up‑front.
Use these related pages if you need to go broader or deeper before you reach out: Tax Accountant, Business Tax Accountant, Bookkeeping Services, BAS Agent Services.
Frequently asked questions
What does a tax accountant for contractors actually do?
They set up and run a clean contractor workflow: ABN/GST/PAYG registrations, GST coding and BAS, PSI assessment, TPAR where required, deductions and year‑end tax returns. They also build a simple way to capture receipts, mileage and subcontractor details so lodgements stay on time.
Do contractors need to register for GST?
Register when your GST turnover reaches $75,000. If you do ride‑sourcing, you must register from the first dollar. Your accountant can register you, configure software and manage quarterly BAS so cash flow stays predictable.
How do the PSI rules affect me?
If most of your income is from your personal effort, PSI can limit income splitting and certain deductions unless you pass the PSB tests. A contractor tax accountant will run the tests, document the position and set up compliant, tax‑effective practices.
What is TPAR and do I need to lodge it?
TPAR is the Taxable Payments Annual Report. If you pay contractors in building and construction, cleaning, courier and road freight, IT or security, you may need to lodge. Your accountant will confirm scope and prepare the report using supplier ABN and payment data.