Freelance creative professionals — designers, UX researchers, copywriters, brand strategists, videographers, photographers — are one of the fastest-growing groups of self-employed Australians. Many start freelancing while still employed, then gradually transition to full-time. By the time income is substantial, tax obligations have quietly accumulated. This guide cuts through the confusion and addresses the questions most freelance creatives actually face.
Do I Need an ABN?
If you invoice clients for creative work — even just one client, even as a side job — yes. The ATO's test is your intent: if you are offering services with the aim of making profit, it is a business, not a hobby.
Without an ABN, clients are obligated to withhold 47% of your payments. That is a strong practical incentive to register, quite apart from the compliance obligation.
What Is Taxable Income?
All of the following must be included in your annual tax return:
- Project fees — fixed-price client work
- Hourly rate billing to clients
- Retainer income from ongoing client relationships
- Licensing fees for creative work (stock images, templates, fonts)
- Affiliate or referral income from tools you recommend
- Teaching, workshops or online courses related to your creative skills
- Platform income — Behance, Dribbble, Envato, Creative Market
GST — When Must You Register?
Once annual business turnover (total revenue, before expenses) exceeds $75,000, you must register for GST. Freelance creatives at mid-to-senior rates often reach this threshold more quickly than they expect.
Once registered:
- You add 10% GST to invoices for Australian clients
- You can claim GST credits on your business expenses
- You lodge BAS quarterly (or monthly if preferred)
GST and Overseas Clients
Australian clients: Standard 10% GST applies to your services.
Overseas clients: Your creative services are typically GST-free as Exported Services, since they are consumed outside Australia.
However: You must still be GST registered once over the threshold, even if all your clients are overseas.
Mixed client base: Each invoice must be assessed — Australian clients attract GST, overseas clients typically do not.
What Can You Deduct?
The key points are below:
- Adobe Creative Cloud, Figma, Sketch, Affinity subscriptions
- Stock photo, icon and font licences used for client work
- Website hosting and domain names for your portfolio
- Computer, tablet, drawing pad, monitors (business-use portion)
- Camera, lenses, lighting for photography or video work
- Professional development — design courses, UX conferences, industry events
- Professional memberships — AGDA, AIGA, relevant industry bodies
- Home office expenses — proportional to business use
- Marketing — portfolio advertising, LinkedIn Premium, job board listings
- Accounting fees and bookkeeping software
- Client meeting costs — reasonable, with business purpose documented
- General clothing — even if you wear it to client meetings
- Home internet bill in full (only the business-use proportion is deductible)
- Personal art, design courses or tools with no commercial purpose
PSI Rules — The Single Client Problem
PSI (Personal Services Income) rules are particularly relevant for freelancers who work primarily with one or two clients. If:
The ATO may treat your income as personal services income, even if you operate through a company. This limits certain tax planning strategies but does not prevent you from having an ABN or company — it just means the tax rate benefit of a company may be limited.
- More than 80% of your income comes from one client in a year
- You work under the direction of that client
- You use their equipment or premises
PSI Warning for Freelancers
Having a company does not automatically mean you pay 25% tax on freelance income.
If PSI applies, profits must be attributed back to you personally in many circumstances.
The solution is often to grow your client base — multiple unrelated clients reduces PSI risk significantly.
A professional assessment of your specific situation is strongly recommended before incorporating.
Company vs Sole Trader — Is It Worth It for Creative Freelancers?
The honest answer for most freelancers: Sole Trader is right until your net income consistently exceeds $80k–$100k, and you have multiple clients rather than one dominant relationship.
At higher income levels and with a diverse client base, a company provides:
- 25% tax rate versus up to 47% personal marginal rate on the same profit
- Ability to retain profits in the company for reinvestment (rather than drawing everything out)
- Limited liability protection from client disputes and contract risks
- A more professional entity for larger corporate client engagements
General information only
This article provides general tax information only and does not constitute personal tax, legal, or financial advice. Tax rules can change and individual circumstances vary.
If you would like advice based on your situation, please get in touch with the practice.
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