Which business structure is right for your franchise? Tim Kilham explains how the sole trader option works for income tax purposes:

Sole trader

If you operate as a sole trader, then you will have to pay tax on all the profits of the business. You have no ability to split the profits with other people [other than by paying salaries to employees for work done].

Accordingly you, the individual franchisee, will pay tax on your income at the same rates as an individual who receives a salary, or an individual who receives investment income.

The rate of tax payable by an individual varies from 0 percent [up to income of about $16,000 for most individuals] to 45 percent for income in excess of $180,000. To these rates must be added the Medicare levy of 1.5 percent.