Support worker or sole trader? Employed vs ABN at tax time

Before you read a single word about what a support worker can claim, there is one question that decides which rules apply to you, and most of the advice online never asks it. Are you an employee, or are you working under your own ABN? Support work, and NDIS and disability work in particular, is split down the middle between those two situations, and they are not variations on a theme. They are two different tax lives. An article written for one is close to useless for the other, and a lot of what circulates on support-worker forums and NDIS blogs is quietly written for the wrong one. So this chapter does the ordering job first. Work out which you are, and everything after it falls into place.

How to tell which one you are

You do not need to guess, and you do not need to read your contract line by line. The way the money reaches you tells you almost everything.

• You are an employee. At the end of the year you get an income statement, tax has already been taken out of each pay, and your employer has been paying super in for you. Someone else is handling the withholding, and you just see what lands in your account.
• You are a sole trader on an ABN. You invoice for your work under your own ABN, the full amount comes to you, and no tax has been withheld. The money you are paid is the money you keep until you sort out tax yourself.

Here is where people get caught. If you pick up shifts through a platform like Mable, Hireup or Kynd, or you are engaged directly by a participant or their family, you are very often a sole trader, even if it feels like a normal job with normal shifts. Plenty of workers only discover this at their first tax time, and it is an unwelcome surprise. If you are unsure, look at how you are paid: withholding and super means employee, an invoice under your ABN means sole trader.

Why the answer changes everything

These are not two flavours of the same return. They sit under different parts of the tax system.

• An employee claims deductions against wages. Your income statement does the heavy lifting, and your job at tax time is to claim the work-related costs you paid for yourself. That is the whole of it.
• A sole trader runs a small business. You report business income, you manage your own PAYG instalments through the year, and once your business turnover reaches $75,000 a year you must register for GST and lodge a business activity statement, the BAS. That $75,000 is a turnover figure, so it can apply even though many NDIS supports are GST-free. Being GST-free on the supports you deliver does not put you under the threshold on its own.

So the same day of driving and caring produces a simple wages deduction for one worker and a business-income-and-BAS obligation for the other. That is why getting this straight comes before anything else.

What each one can claim

The good news is that the core work costs are the same for both, and claimed the same way for the work-use share. Whether you are employed or on an ABN, the car between clients, your uniform and PPE, your checks and training, and the work part of your phone are all on the table. Where the two part ways is the extra layer a business carries.

• A sole trader can also claim genuine business expenses. Public liability and professional indemnity insurance, the accounting or job-management software you run the business on, and the admin of running it. These are real deductions, but only because you are the business.
• An employee cannot claim any of those. They are not your costs, because the business is not yours. This is the tell to watch for: if you are an employee and you see insurance, business software or an ABN registration on an NDIS deductions list, that list was written for sole traders, and following it would put things on your return that do not belong there.

An honest note if you are a sole trader

We would rather be straight with you than pretend to cover a situation we do not. The rest of this support-worker series, and PFO itself, is built for the employed PAYG worker. If you are a sole trader, your tax is a business return, with GST and a BAS to keep on top of, and PFO does not do GST or BAS. That is a different job, and it is worth finding a registered tax agent who works with NDIS contractors and knows the field. Getting the right help early is cheaper than untangling a year of it later.

If you are employed, here is where to go next

If the way you are paid says employee, you are in the right place, and the detail is waiting for you. Two chapters carry the parts that matter most for a support worker: the driving is usually the biggest one, so start with the car and travel between clients, then work through your checks and training. Those are the costs support workers most often fund themselves and most often leave on the table.

The records that settle it either way

Whichever side of the line you land on, the habit is the same, and it is the thing that quietly decides how your tax goes. Keep the receipts, and keep a note of how you split anything used for both work and life, like the fuel in your own car or the phone that never stops for roster changes. The catch is timing: a work-use split is easy to record the week it happens and near impossible to reconstruct in July from a shoebox of faded dockets. The ATO's free myDeductions app will hold the basics.

The bottom line

One question sits in front of all the others: employee or sole trader. Check how you are paid, and you have your answer. If tax is withheld and super is paid, you claim your work costs against your wages and the next chapters are written for you. If you invoice under your own ABN, you are running a business with GST and a BAS to manage, and a good agent is worth every dollar. Getting this right at the start means every bit of effort you put into your tax lands where it should, instead of solving the wrong problem.

General information only, not tax advice. Check the ATO or a registered tax agent for your situation.