You have decided to freelance, or you are already invoicing clients from the spare room and the questions are piling up. Do you need a company, or is a sole trader fine? Do you have to register for GST? Who owns the work you deliver, you or the client? And what happens if a client simply does not pay? None of these are unanswerable, but the legal defaults behind them surprise most freelancers, and parts of the law changed in 2024 in ways that many guides have not caught up with.
What legally makes you a freelancer
A freelancer runs a business. You provide services to clients under a contract for services, not a contract of employment, and that distinction drives almost everything else. Employees are entitled to minimum wages, leave, superannuation and unfair dismissal protection under the Fair Work Act 2009 (Cth). Independent contractors are not, because they carry their own risk, supply their own tools and run their own business.
What decides which side of the line you sit on is not the label in your agreement. Since 26 August 2024, the Fair Work Act 2009 looks at the contract as a whole and asks whether there is a realistic prospect that the person would be working in the business of the other party. An engagement letter that says "independent contractor" in bold capitals does not, by itself, settle it. If a client directs your hours, supplies your tools and treats you as part of the team, the label will not protect either of you if the arrangement is challenged. Misclassification can mean back payment of entitlements, unpaid super and penalties, and the Australian Taxation Office applies its own test for tax and super purposes.
Superannuation is a common blind spot in both directions. Even where you are a contractor for other purposes, if a contract is wholly or principally for your personal labour and skills, the client may owe you super guarantee on top of your fees. The ATO's guidance on super for independent contractors explains when this applies, and it is worth checking before you price a long engagement without super.
The new rules also cut the other way if you hire subcontractors. Since 26 August 2024, the Fair Work Commission can set aside or vary unfair terms in services contracts where the contractor earns below the contractor high income threshold, which is $190,100 for the financial year starting 1 July 2026. Your subcontractor agreement needs to be fair as well as clear, or a subcontractor can have a one-sided term rewritten for them.
Setting up the business: structure, ABN, GST and the tax traps
There is no single right structure, but the choice shapes your liability, your tax and how clients see you.
- Sole trader: The simplest option. You use your own tax file number, keep full control and pay tax at your personal rates, but you are personally liable for business debts and any claim against you.
- Company (Pty Ltd): A separate legal entity, so limited liability and often a more formal impression for larger clients. The trade-offs are setup costs, annual ASIC fees and ongoing reporting obligations.
- Partnership: Two or more people running the business together, sharing profits and, usually, liability. A written partnership agreement covering roles, profit shares and what happens when someone leaves is essential.
Many freelancers start as sole traders and incorporate later as income and risk grow. Before you incorporate for tax reasons, though, check the personal services income (PSI) rules. Where more than half of your income is a reward for your own skill and effort, the ATO's PSI rules can attribute that income back to you as an individual even when it is earned through a company or trust. A Pty Ltd does not automatically shelter freelance income from tax.
Three registrations matter most. First, an Australian Business Number. You need one to quote on invoices and claim GST credits. If you do not quote an ABN, your client is generally required to withhold tax at the top rate from any payment over $75 and send it to the ATO. That rate is 47% for most individuals, including the Medicare levy, so on a $2,000 invoice your client would keep $940 for the ATO and pay you $1,060. Second, register a business name with ASIC if you trade under anything other than your own full name. Third, GST: you must register once your GST turnover is $75,000 or more in a 12-month period, whether measured on past or projected sales, and you have 21 days to do it after crossing the threshold. Providing ride-sourcing or taxi travel requires registration regardless of turnover. The ATO's registration page sets out the calculation.
Finally, build the record-keeping habit early. Keep copies of every quote, signed contract, invoice and expense, and put a simple business activity statement routine in place from the first quarter. If a dispute or an ATO review arrives years later, the file is your defence.
The consumer, privacy and IP rules that apply to a one-person business
Freelancing is running a business, and business laws apply even when the business is just you. Three areas matter most.
The Australian Consumer Law
Under s 18 of the Australian Consumer Law (the ACL), which is Schedule 2 of the Competition and Consumer Act 2010 (Cth), you must not, in trade or commerce, engage in conduct that is misleading or deceptive or likely to mislead or deceive. Your website, proposals and marketing claims are all caught, so keep promises realistic and spell out assumptions. When you supply services to consumers, the ACL also implies guarantees that the services will be provided with due care and skill, be reasonably fit for the stated purpose and be supplied within a reasonable time. And since November 2023, proposing or relying on an unfair term in a standard form consumer or small business contract is prohibited and can attract penalties under s 23 of the ACL. A small business contract is one where a party has fewer than 100 employees or turnover under $10 million, with no cap on the contract's value. This cuts both ways: your own terms must be fair, and harsh terms in contracts clients hand you can be attacked too.
Privacy
The Privacy Act 1988 (Cth) applies to APP entities, and most freelancers fall within the small business exemption in s 6D of the Act: if your annual turnover is $3 million or less, you are generally not bound by the Australian Privacy Principles. But the exceptions catch more freelancers than people expect. You are not exempt if you provide a health service and hold health information, if you disclose or trade in personal information for a benefit, if you collect personal information for a benefit, if you are a contracted service provider for a Commonwealth contract, or if you are a credit reporting body. Even when you are exempt, a short plain-English privacy policy is good practice if your website collects names, emails or analytics, and if clients hand you their customer data, your contract should say who is responsible for protecting it and reporting breaches.
Intellectual property
Who owns the work you create is the question freelancers get wrong most often. Under s 35 of the Copyright Act 1968 (Cth), the author is the owner of copyright in original works. Two carve-outs matter: work made under a contract of service belongs to the employer, and the parties can agree otherwise. Payment alone does not transfer ownership. A client who pays for a website build does not automatically own the code, copy or design unless the contract says so. Your service agreement should state whether the client receives an assignment of copyright on full payment or a licence to use the work, what you may use in your portfolio, and how moral rights, such as the right to be credited as the author, are dealt with. For your own brand, a trade mark registered with IP Australia gives you the exclusive right to use the mark in your registered classes across Australia, and it is the most practical way to stop copycats.
The contracts to have in place before you start work
Your documents do not need to be elaborate, but they need to cover the points that actually cause disputes. Most freelancers should have at least these:
- Service agreement: The core client contract. It should set the scope, deliverables, timelines, fees and payment schedule, how many rounds of revisions are included, who owns the IP, confidentiality, a liability cap, termination rights and how disputes are resolved.
- Statement of work or proposal: The project-specific detail attached to the service agreement. Define deliverables, milestones, feedback rounds and assumptions, and state clearly what is excluded.
- Contractor agreement: If you bring in another freelancer, cover confidentiality, IP ownership, payment, timelines and quality standards. Remember the Fair Work Commission can now review unfair terms in services contracts, so keep it balanced.
- Non-disclosure agreement: Useful when you discuss pricing, client lists or concepts with prospective clients before you are formally engaged.
- Privacy policy and website terms: If you collect personal information or run a website, publish a policy that matches your actual practices, and set out the rules for visitors.
The documents clients give you matter just as much as the ones you give them. Read the clauses on IP assignment, exclusivity, indemnities and liability limits before you sign, because once you sign, the UCT protections in the ACL only rescue you from genuinely unfair standard form terms.
Getting paid: quotes, payment terms and scope control
Cash flow is where freelancing becomes stressful, and most payment problems trace back to the quote and the contract.
Make quotes specific. List deliverables, inclusions and exclusions, revision rounds, turnaround times and what you need from the client, such as content or access. State your fee structure, the payment schedule and what triggers extra fees, so a fixed-fee package cannot silently become an open-ended one.
Keep payment terms short and consistent. Many freelancers use seven to fourteen day terms for smaller projects and milestone billing for larger ones, and a deposit of 30% to 50% before starting work filters out clients who were never going to pay. Align invoice line items with the milestones in your statement of work so there is no argument about what an invoice is for.
One gap in Australian law is worth knowing: unlike some other countries, Australia has no general statutory right to charge interest on overdue invoices between businesses. If you want late fees or interest, your service agreement must say so, and the rate should be reasonable. Otherwise your main levers are stopping work, if the contract allows suspension for non-payment, and ultimately recovering the debt.
Build a change process into the contract. When the client asks for extra features or revisions beyond the included rounds, you quote, they approve in writing, and work pauses until the variation is confirmed. Keep the paper trail in email so there is no dispute later about what was agreed.
When payment does not arrive, the sequence is simple: a friendly reminder, then a firmer follow-up that references the contract and the due date. If the client raises a genuine quality dispute, resolve it against the statement of work rather than in the abstract. And quote your ABN on every invoice, because a client cannot be excused from the 47% no-ABN withholding if you never gave them the number.
When to bring a lawyer into your freelance practice
The rules in this guide get you most of the way, but a few decisions are judgement calls that depend on your specific situation. Choosing a structure when PSI, liability and growth plans pull in different directions; drafting a service agreement that assigns IP cleanly, allows suspension for non-payment and survives a UCT challenge; reviewing a client contract that demands global IP assignment or an open-ended indemnity; and responding when a client disputes an invoice or a subcontractor takes a contract to the Fair Work Commission are all places where tailored advice pays for itself. Artificer Legal regularly drafts and reviews freelance and contractor agreements, advises on contractor status and business setup, and helps resolve payment and IP disputes, so you can focus on the work.
The document decides, not the label
The two most expensive assumptions a freelancer can make are "they paid me, so the work is theirs" and "we wrote contractor in the agreement, so it is settled". Both are wrong. Copyright stays with you as the creator unless you assign it, and since August 2024 the Fair Work Act reads the whole contract to decide whether someone is genuinely working in another person's business. In both cases the written document is the lever: it is where ownership, payment terms and fairness are decided before a dispute exists.
Set up as a sole trader or company, register your ABN, business name and GST when required, and check the PSI and super rules. Treat the ACL, privacy and copyright rules as applying to you even though you work alone. Put a service agreement, statement of work and contractor agreement in place before taking on clients, with fair terms that assign IP on payment, allow suspension for non-payment and control scope changes. Quote your ABN on every invoice and keep the records. Freelancing is a business, and the legal essentials are mostly about getting the documents right at the start.