Tracking your music teaching income for tax in Australia

ABN first, then everything else

Teaching music privately in Australia makes you a sole trader running an enterprise, and the first administrative step is an Australian Business Number. It is free, it is not a tax registration in itself, and you need it before you can register for GST.

It also has a practical effect on how you get paid. If you invoice a business — a school, a community music centre, an arts organisation — without quoting an ABN, the payer is generally required to withhold 47% of the payment and send it to the ATO. Teachers who take on school work discover this the hard way, on their first invoice.

The income year runs 1 July to 30 June, which sits more comfortably against the Australian school year than the UK or Canadian equivalents. If you lodge your own return it is due by 31 October.

GST: unlike Canada and the UK, your lessons are taxable

This is the part where advice written for music teachers elsewhere will actively mislead you. In Canada private music lessons are GST/HST-exempt, and in the UK private tuition by a sole trader is VAT-exempt. Australia does not work that way.

The GST-free treatment of education attaches to an education course delivered by the supplier of that course. Private music lessons given to school students are not the delivery of a curriculum by the course provider, so the ATO's position is that they are a taxable supply — and it makes no difference whether you teach at your own studio or in a room at the school.

So the $75,000 GST turnover threshold is a live number for an Australian music teacher in a way it simply is not for a Canadian or British one. Once your GST turnover reaches $75,000 you must register, and you have 21 days to do it. If you register late, you can be liable for the GST on sales made since the date you were required to register — even if you never charged it to those families — plus penalties and interest.

Check monthly rather than annually. A studio that grows through the year can cross the threshold in March and not notice until the following October, by which point the liability has been accruing for seven months and cannot be recovered from families who have already paid.

Registering is not purely a cost. Once registered you claim GST credits on what you buy for the studio, which matters most in a year you buy an instrument.

What you can deduct

The general test is that the expense is incurred in earning your assessable income, and where there is private use you apportion. Keep the working, not just the number.

• Instruments and equipment. Small businesses can use the instant asset write-off to deduct the full cost of eligible assets costing less than $20,000 in the year they are first used or installed ready for use. From 1 July 2026 that $20,000 threshold is permanent rather than an annually extended measure. Assets above the threshold go into the general small business pool and are depreciated.
• Tuning, repairs, strings, reeds and servicing — ordinary running costs, deductible in the year incurred.
• Sheet music, method books, AMEB entry fees you pay on a student's behalf and are not reimbursed for.
• Home studio running costs. Electricity, gas and the decline in value of furniture and equipment in the teaching area, apportioned for business use. Claiming occupancy costs such as rent, mortgage interest or rates is a different and stricter question, and it can affect the capital gains tax main-residence exemption on your home — take advice before claiming occupancy costs.
• Car expenses for travel to students, using either the cents-per-kilometre method or a logbook. Travel between home and a regular place of work is private.
• Software and subscriptions: studio management, notation, video lesson platforms, accounting.
• Professional costs: association memberships, insurance, Working With Children Check, and professional development that maintains or improves the skills you teach with.
• Bank and merchant fees on tuition you collect.

PAYG instalments

In your first year of self-employment nothing is withheld from your tuition, so the tax arrives as one amount after you lodge. The ATO's response is to enter you into PAYG instalments, where you pre-pay the next year's tax in quarterly instalments reported on a business activity statement or instalment notice.

You do not opt into this — the ATO notifies you once your business income and notional tax reach the entry thresholds. The useful thing to know in advance is that the first year of being in the system means paying two things in close succession: the balance for the year just finished, and instalments toward the year already underway.

Set aside a fixed percentage of every payment a family makes, in a separate account, from the first lesson. For a studio of this size, something in the region of 25-30% is a reasonable starting assumption, adjusted once you have seen one full year.

Superannuation, which nobody withholds for you

As a sole trader you are not required to pay super for yourself, and no employer is doing it either. This is the largest invisible difference between teaching privately and teaching on staff at a school.

Personal contributions to a complying super fund are generally deductible if you notify the fund of your intent to claim, within the required time and before you lodge. Whether that is the right use of the money depends on your circumstances, but the decision should be a decision, not something that happens by default because nobody sent a payslip.

A worked example: a studio of 20 students

Twenty weekly students at $45 a lesson across a 36-week year is $32,400 of scheduled tuition. Assume $1,100 was never collected. Gross income is $31,300 — comfortably under the $75,000 GST threshold, so this teacher is not registered and charges no GST.

Note what the piano does. A $6,800 instrument written off in full in the year of purchase drops taxable income by more than a fifth, which is welcome — but it also means next year's income looks dramatically higher with no change in teaching. If PAYG instalments are set from the low year, the following year's bill will overshoot them.

Note also the $1,100 that was never collected. It is not a deduction, because it was never income. The only place it exists is in the gap between lessons taught and lessons paid for, which is exactly the number an informal system loses track of.

Records: five years, and what actually goes missing

You must keep written evidence for five years from the date you lodge the return it supports. That includes tax invoices, receipts, bank statements, your car logbook or kilometre records, and the basis for any apportionment you claimed.

For a teaching studio the weak point is almost always the link between a bank deposit and the lessons it paid for. A transfer labelled with a parent's surname and an amount is evidence that money arrived. It is not evidence of what it was for, how many lessons it covered, or whether a makeup was included — and by October, nobody remembers.

How it works

1. 1Bill from your lessons through the year and record each payment against its invoice so income is captured as it comes in.
2. 2Scope billing and reporting to the Australian financial year — Note & Key uses the 1 July–30 June boundaries automatically.
3. 3Export a financial-year income summary to give your accountant or use when you lodge.

Common questions

Sources

• ATO GSTR 2000/30 — supplies that are GST-free for tertiary and other education courses (private music lessons)
• ATO — Registering for GST
• ATO — Instant asset write-off for eligible businesses
• ATO — $20,000 instant asset write-off (permanent from 1 July 2026)
• ATO — Income tax return, lodgment due dates
• ATO — Records you need to keep

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