This way of trading suits the individual trades person who is contracted to perform tasks generally described as “Personal Services”, also trades people who are just starting up their business and trades people who are winding down their business. Also people who are expanding a hobby to produce income. The earnings from these businesses generally produce between a very low income and a general wage.
A “Personal Services Income” earner would be restricted to the deductions allowed to an employee and are not allowed to split their income with any other person.
Others that are considered to be a business would apply deductions relating to producing that business income, they would then be assessed on the net profit of that business.
As yet, Sole Traders are not required to make compulsory superannuation contributions for themselves, nor are they required to cover themselves for work cover.