How is PAWE calculated for sole traders and business owners?

Schedule 1 clause 3 includes the proceeds of a business carried on by the person within income from personal exertion. Official PIC decisions dealing with self-employed PAWE have examined business income after genuine expenses rather than adopting turnover as the claimant’s personal earnings. The precise accounting treatment depends on the records and the legal issue before the decision-maker.

The general clause 4 period is the 12 months immediately before the accident. If the business had been providing continuous earnings for less than 12 months but was likely to continue for at least six months on the same or similar basis, clause 4(2)(a) may use the actual continuous period. A qualifying self-initiated increase can engage clause 4(2)(b), and a binding arrangement to commence a business may engage clause 4(2)(c).

Start with a transaction-level profit-and-loss schedule for the statutory period. Identify sales or professional fees, GST treatment, refunds, cost of goods, subcontractor costs, rent, vehicles, insurance, depreciation and any private or capital item. An expense claimed in a tax return is not automatically accepted or rejected for PAWE; the purpose and evidence matter.

If the business employed staff or relied on subcontractors, explain what income was generated by the claimant’s personal services and what depended on other people or capital. If the claimant also earned wages, keep the wage and business evidence separate before combining any amounts under the correct legal method.

Assume the general 12-month rule applies. A sole trader records AUD 156,000 of business receipts and AUD 52,000 of documented genuine business expenses for that period, leaving AUD 104,000 attributable business earnings before personal income tax. A simplified 52-week average is AUD 2,000 per week.

This example assumes the records are complete, GST and capital items have been dealt with correctly, the expenses are genuinely business-related, and no Schedule 1 exception applies. It is not a formula for every business owner. Company profits, drawings, dividends, loan movements and retained earnings may require accounting and legal analysis rather than automatic inclusion.

Provide source material that lets the insurer reproduce the result. A tax return alone can be too broad or may not cover the exact period. A spreadsheet without invoices or statements is also vulnerable.

• Business and personal tax returns, BAS and accountant working papers.
• Transaction-level profit-and-loss report for the exact statutory period.
• Business bank statements, invoices, receipts and merchant reports.
• Expense ledger identifying private, capital, GST and one-off entries.
• Contracts, bookings or pipeline evidence if a recent change is relied on.
• Payroll or wage records for any concurrent employment.
• Insurer calculation showing revenue, deductions, period and divisor.

Typical errors include using turnover as earnings, deducting private or capital items as business costs, ignoring genuine operating expenses, mixing financial years with the statutory period, overlooking a newly commenced business category and confusing drawings with profit. A one-off transaction can also distort a short period if it is not explained.

Do not solve an uncertain category by selecting the most favourable number in the PAWE calculator. Where the evidence does not identify the legal period or the earnings generated by personal exertion, the automated result should be treated as unavailable and the records reviewed individually.

Ask for the insurer’s written PAWE decision, accounting assumptions and source schedule. Prepare a correction table that identifies the disputed receipt or expense, the supporting record and the resulting change. PAWE is a merit-review issue; a concurrent medical work-capacity dispute should be kept in a separate evidence stream.

Last reviewed: 11 August 2026. Source basis: Motor Accident Injuries Act 2017 (NSW), Schedule 1; SIRA Motor Accident Guidelines version 10.1, including clauses 4.44–4.70; and current official SIRA and PIC material.

A complex company structure, partnership, new business, mixed personal and business expenditure or incomplete records may require a registered tax adviser or accountant as well as legal advice. Contacting the firm does not extend any review period. Send the decision and the best available accounts promptly, identifying records still missing.