Tax for Australian Cleaners

Australian cleaners pay income tax on trading profit at individual rates (sole trader) or 25% company tax (Pty Ltd base rate entity). GST registration is compulsory at $75,000 turnover. Cleaning is specifically listed as a TPAR industry with a low 10% income threshold, so any cleaning business paying subcontract cleaners must lodge a Taxable Payments Annual Report by 28 August each year.

Last reviewed: 27 May 2026

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The Australian cleaning industry is one of the ATO's highest-compliance-focus sectors. Cleaning is specifically listed as a Taxable Payments Annual Report (TPAR) industry, meaning any cleaning business with an ABN that pays contractors to provide cleaning services must lodge TPAR by 28 August each year. The 10% income test is lower than any other TPAR industry. Many cleaning operators are new Australians building a business for the first time, and the combination of ABN requirements, GST thresholds, TPAR obligations, and withholding rules on clients who fail to obtain an ABN creates a compliance landscape that catches operators off guard. Tax obligations include income tax on trading profit (sole trader) or company tax at 25% (Pty Ltd base rate entity), GST registration once turnover hits $75,000, and accurate record-keeping of all contractor payments.

What business structure do Cleaners use?

The common patterns for Cleaners are: Sole trader: simplest setup, ABN registration only, suits one-person domestic cleaning operators under roughly $100k profit, Pty Ltd company: limited liability, access to 25% base rate entity tax, better suited once you employ or subcontract a team of cleaners and need structural separation of business risk, Partnership or trust: occasionally used for family cleaning businesses or income-splitting arrangements (s.100A risk applies to non-arm's-length distributions). The right structure depends on revenue, liability exposure, and personal circumstances, covered below.

How does TPAR apply to Cleaners?

Cleaners paying subcontractors for building and construction services may need to lodge a Taxable payments annual report. See the dedicated TPAR mechanics below.

How does TPAR apply to cleaning businesses?

Cleaning is specifically listed as a TPAR industry with its own low threshold. If your business has an ABN, provides cleaning services, and pays contractors to provide cleaning services on your behalf, you must lodge a Taxable Payments Annual Report by 28 August each year. If cleaning is only part of your business, the 10% test applies: add up all income from cleaning (including work done by employees and contractors). If 10% or more of total business income is from cleaning and you paid contractors for that cleaning work, TPAR is required. The report lists each contractor's name, ABN, gross payments, and GST component. The ATO cross-matches this data against contractor tax returns to detect undeclared income. The cleaning industry is a current compliance priority, and the ATO has issued penalties for late or missing TPARs. If you engage any subcontract cleaners at all, assume TPAR applies.

Cleaning businesses that pay contractors to provide cleaning services must lodge TPAR by 28 August. The 10% income test applies where cleaning is only part of the business. (TAA 1953 Schedule 1 Division 396; ATO guidance ATO cleaning industry TPAR guide)

What happens if my client does not get my ABN?

When a business pays a cleaner who has not quoted an ABN, the payer is required to withhold 47% from the payment (the top marginal rate plus Medicare Levy) and remit it to the ATO. This means the cleaner receives only 53 cents in every dollar. This is not a penalty for the cleaner; it is a withholding obligation on the payer. However, in practice, many cleaning contractors lose work because commercial clients refuse to pay without an ABN, or withhold at 47% and the cleaner does not realise until lodging their return. Every cleaning contractor should obtain an ABN before quoting their first job and include it on every invoice. If you are a new Australian setting up a cleaning business, ABN registration is free through the Australian Business Register and takes minutes online.

Payers must withhold 47% from payments to contractors who have not quoted an ABN. The withholding is remitted to the ATO and credited against the contractor's tax liability at year end. (TAA 1953 Schedule 1 Division 12, s 12-190; ATO guidance ATO no ABN withholding guide)

When do I need to register for GST?

GST registration is mandatory once your annual turnover reaches $75,000 (gross business income, not profit). Cleaners with regular commercial contracts or NDIS clients can hit this threshold quickly, sometimes within their first year of operation. Voluntary registration below the threshold lets you claim GST credits on cleaning supplies, equipment, and vehicle expenses. The trade-off: you charge 10% GST on every invoice and lodge BAS quarterly or monthly. For cleaners doing a mix of domestic and commercial work, all income counts toward the $75,000 threshold. Crossing it mid-year triggers a 21-day registration window. Late registration attracts penalties and backdated GST on all invoices from the date you should have registered. NDIS cleaning services are GST-free (not input-taxed), so NDIS income still counts toward turnover but you do not charge GST on those invoices.

GST registration is compulsory when annual turnover reaches $75,000. NDIS cleaning services are GST-free but still count toward the turnover threshold. (A New Tax System (Goods and Services Tax) Act 1999 s 23-15 and s 38-38; ATO guidance ATO GST registration guide)

Do I owe super on subcontractor payments?

If you engage an individual contractor (not a company or trust) and the contract is wholly or principally for their labour rather than a supply of materials or equipment, you must pay Superannuation Guarantee on the labour component at the current SG rate (12% for 2025-26). In cleaning, almost every subcontractor arrangement is principally for labour. Cleaners rarely supply significant materials or equipment; the client or head contractor usually provides supplies or the subbie brings only basic cleaning products worth a fraction of the invoice. This means SG obligations apply to most individual cleaning subcontractors. The test: is more than 50% of the invoice for labour? In cleaning, the answer is almost always yes. Head contractors who treat cleaning subbies as independent when the economic substance is employment will face SG shortfall charges, plus the Part 7 penalty (up to 200% of the shortfall) for failing to lodge Superannuation Guarantee Charge statements.

Contractors engaged principally for labour (not materials or equipment) are deemed employees for SG purposes; the payer must contribute SG at the current rate on the labour component. (SGAA 1992 s 12(3); ATO guidance ATO super for contractors guide)

Contractor vs employee: the written contract is decisive

The High Court reset the contractor/employee test in 2022. Where there is a comprehensive written contract that is not a sham, classification turns principally on the rights and obligations established by that contract — not on the day-to-day conduct of the parties. Get the engagement contract right at the start; do not rely on post-contract behaviour to recharacterise the relationship later. This matters because misclassification exposes the engager to PAYG withholding shortfalls, super guarantee charge (with the contractor-deemed-employee extension under SGAA 1992 s 12(3)), and payroll tax. It also affects whether the worker can deduct business expenses and whether PSI rules engage.

Contractor vs employee classification is determined principally by the rights and obligations in the written contract, not by post-contract conduct. (CFMMEU v Personnel Contracting Pty Ltd [2022] HCA 1; ZG Operations Australia Pty Ltd v Jamsek [2022] HCA 2 (companion case); ATO guidance TR 2023/4 (employee vs independent contractor))

Home running costs: PCG 2023/1 fixed-rate vs actual cost

Most workers in this trade do some admin from home — quoting, invoicing, scheduling, BAS prep. From 1 July 2024 the ATO fixed-rate method is 70c per hour worked from home and covers electricity, gas, internet, mobile, stationery and computer consumables. You cannot also claim those bills separately under the fixed rate. You can still separately depreciate office furniture and equipment used at home. FY 2024-25 and FY 2025-26 rate: 70c/hr. FY 2022-23 and FY 2023-24 rate: 67c/hr. The fixed rate requires a contemporaneous record of actual hours worked from home — a timesheet, calendar or app log. Estimates and four-week samples are no longer accepted for the fixed rate method (they remain valid for the actual cost method).

The fixed-rate method for home office running costs is 70c per hour from 1 July 2024 and requires a record of actual hours worked from home. (PCG 2023/1 (as amended); ITAA 1997 s 8-1; ATO guidance TR 93/30; TR 2024/3)

Allowable expenses

Category	Examples	Tax treatment
Cleaning supplies and chemicals	Detergents, disinfectants, window cleaning solution, carpet shampoo, mops, buckets, microfibre cloths, bin liners	Deductible as consumable business expenses in the year of purchase. GST credits claimable if GST-registered
Equipment	Commercial vacuums, floor scrubbers, pressure washers, steam cleaners, carpet extraction machines, window cleaning rigs	Immediate deduction if under $300 per item; instant asset write-off up to $20,000 (2025-26) for SBE; depreciation over effective life above that
Work vehicle	Fuel, servicing, registration, insurance, tyres, interest on finance, decline in value for van or car	Logbook method (actual costs x business-use %) or cents-per-km (88c/km, max 5,000 km). Car limit $69,674 applies to passenger vehicles
PPE and work clothing	Gloves, masks, respirators, non-slip shoes, knee pads, branded uniforms or compulsory clothing	Deductible if protective or compulsory uniform. Laundry claimable using ATO benchmark rates
Insurance	Public liability, income protection, tool and equipment cover, motor vehicle insurance (business portion)	Deductible as business operating expense
Training and certifications	Industrial chemical handling courses, WHS accreditation, infection control training, first aid renewal	Deductible if maintaining or improving skills in current trade. Initial qualifying training is not deductible
Phone, software, admin	Mobile phone (business %), scheduling apps (Swept, ZenMaid), accounting software (Xero, MYOB), invoicing tools	Deductible, apportioned to business use
Travel between jobs	Tolls, parking at client sites, fuel for travel between cleaning jobs during the day (not home-to-first-job)	Deductible for travel between work sites. Home to first job and last job to home are generally not deductible unless carrying bulky equipment with no secure storage alternative

Vehicle and travel costs

Cleaners who carry bulky equipment (commercial vacuums, floor scrubbers, ladders) may qualify for the home-to-work travel deduction if there is no secure storage at a regular workplace and the equipment is bulky enough that it cannot reasonably be carried on public transport. Otherwise, only travel between client sites during the day is deductible. For the vehicle itself, most full-time cleaners running multiple jobs per day should use the logbook method: a 12-week representative logbook establishes business-use percentage (typically 60-80% for mobile cleaners), applied to all running costs for the year. The logbook is valid for five years unless circumstances change. Cents-per-km (88c/km, max 5,000 km, capping at $4,250) rarely covers actual costs for a full-time operator.

Capital allowances and equipment

The instant asset write-off threshold for small business entities (turnover under $10 million) is $20,000 per asset for 2025-26. A $2,500 commercial vacuum, a $4,800 carpet extraction machine, or a $15,000 ride-on floor scrubber can each be written off in full in the year of purchase. For assets above $20,000 (a $25,000 van fit-out, for example), the simplified depreciation pool applies: 15% in the first year, 30% in subsequent years. Small tools and supplies under $300 each (mops, buckets, microfibre cloths) are immediately deductible regardless of entity size.

Worked example

Maria — Newcastle, NSW

sole trader commercial and domestic cleaner (NSW) (FY 2025-26)

Annual revenue $88,000 from commercial office cleaning contracts ($55,000) and domestic house cleaning ($33,000). She pays one regular subcontractor (individual, no ABN initially obtained but now registered) $18,000 for commercial work. Cleaning supplies and chemicals $3,200. Commercial vacuum and carpet extractor purchased this year $3,800. Van running costs $7,600 (logbook shows 72% business use). Public liability insurance $980. Phone and scheduling app $1,200 (70% business). First aid and chemical handling refresher $420. Accounting fees $900.

Deductions: supplies $3,200 + equipment (instant write-off) $3,800 + van ($7,600 x 72%) $5,472 + insurance $980 + phone/software ($1,200 x 70%) $840 + training $420 + accounting $900 = $15,612 total deductions.

  Taxable income: $88,000 - $15,612 = $72,388.

  Income tax: $0 on first $18,200. $26,800 x 16% = $4,288. $27,388 x 30% = $8,216. Total income tax = $12,504.

  Medicare Levy: $72,388 x 2% = $1,448.

  Total tax: $12,504 + $1,448 = $13,952. Effective rate: 19.3%.

  Maria must also lodge TPAR by 28 August (she pays a subcontractor for cleaning services and 100% of her income is from cleaning). She owes SG at 12% on the $18,000 paid to her individual subcontractor ($2,160), as the contract is principally for labour.

Common ATO audit triggers for Cleaners

TPAR mismatch: head contractor or commercial client reports payments to your ABN that exceed your declared income
Cash jobs not declared (ATO cross-references bank deposits and lifestyle indicators; the cleaning industry is a specific compliance target)
No ABN quoted on invoices, triggering withholding issues and ATO alerts
High vehicle claims without a logbook to substantiate business-use percentage
Claiming home-to-work travel without meeting the bulky equipment exception requirements
SG shortfall on individual cleaning subcontractors treated as independent contractors when the arrangement is principally for labour

Frequently asked questions

Do I need a licence to operate a cleaning business?+

No occupational licence is normally required for general cleaning in Australia. However, if you use industrial cleaning chemicals, fumigants, or agricultural herbicides, you may need accredited training and chemical handling tickets under state WHS or agricultural chemical control laws. Course fees, renewal costs, and protective equipment are all tax deductible. You do need an ABN to operate as a business, and GST registration once turnover reaches $75,000.

I am new to Australia. What do I need to set up a cleaning business?+

Register for an ABN (free, online through the Australian Business Register). Once your turnover reaches or is expected to reach $75,000, register for GST. Open a separate business bank account. Keep records of all income and expenses. If you pay subcontractors to clean for you, lodge a TPAR by 28 August each year. Consider voluntary GST registration even below the threshold if you want to claim GST credits on equipment and supplies. Use accounting software (Xero, MYOB, or even a simple spreadsheet) from day one.

What is the no-ABN withholding rule and how does it affect me?+

If you do not quote your ABN on an invoice to a business client, that client is required by law to withhold 47% of the payment and remit it to the ATO. You only receive 53 cents in the dollar. The withheld amount is credited against your tax liability when you lodge your return, but the cash flow impact is severe. Always quote your ABN on every invoice. If a client withholds because you had no ABN at the time, the credit appears on your tax assessment.

Can I claim the cost of my cleaning supplies?+

Yes. Detergents, disinfectants, mops, cloths, bin liners, and all consumable cleaning supplies used in your business are fully deductible in the year of purchase. If you are GST-registered, you also claim the GST credit (input tax credit) on each purchase. Keep tax invoices and receipts for everything. Supplies purchased for personal household use are not deductible.

Last reviewed: 27 May 2026