Sitting Straight on Heel

Max never would sit straight when he was in school - sometimes he does now.  He just sits goofy and sort of sideways.  I finally decided that was OK- sitting is sitting and as long as his little butt hits the ground when he hears "sit" sideways and goofy works for me.[]

Sitting "Butt-out", laying a paw on your foot, leaning on you, etc. are all behaviors that demonstrate dominance and unfortunately, as tedious as it is, the only way to stop it is to continue to correct it. The proper "finished position" is technically with the dog on the left side, sitting with their chest in line with your left leg. Butt out is not acceptable, and when you fix it, dont praise her. She is going to associate the praise with the fact that you are moving her next to you every time she does that. Only praise her when she does it right the first time. When you down OR sit your dog in the finished position and they put a paw on your foot, VERY obviously take your foot and move it out from under their's and move their's away. If they lean on you, bump them over with your knee. I often suggest if your dog continues not to sit properly pick them up in a heel right away and start moving them around, doing lots of changing of direction, about turns, etc. because the heel is very submissive and shows control because they have no choice but to move with you, especially on-leash. After you move her around for 1 minute or so and get her focus back on you, see how she's sitting automatically. My guess would be it's probably improved. Trust me, I've been there with my now fully trained 95lb. dog and I'm in the same process of doing it with my 60lb. dog who's doing basic obedience and will be getting his CGC in a few weeks.
 
Hope this helped!

Two things my trainer told me for this:
 
1.  Make sure you are standing straight and not dropping your shoulder on the heel side.
2.  Look straight ahead when you stop instead of looking down at the dog.
 
It seems to help with my lab.  My dobe sits square most of the time.

Some Aussies are just trying to make sure they know where you are, not being pushy - it's a herdiness thing.  So, to start out punishing could ruin your relationship for a long time...
And, you must make certain that lazy sits in this breed aren't a result of hip dysplasia. 
 
If your dog is physically healthy, and you want straighter sits, you can clicker train them easily.  With this breed, once they learn something, they rarely forget how to do it, and they are smart as a whip!  Aussies, especially working style Aussies, do not do as well with physical correction and may become recalcitrant.  Much better to lure them into the position you want, and reward them for getting there. 

Our trainer sent us home with a tip for this.  He suggested walking close to a wall so that when Scout auto-sits there is no room for him to swing his back end around.
 
Seems to help a bit for Scout.

As spiritdog says, verify correct functional structure.  There are a number of ways to get a straight sit.  One is to stop doing it for the dog and only reinforce when the dog is correct.  Another is to do quarter turns with a full step so the dog actually has to get up out of the sit to move into position.  You may need to step more than once in the beginning.  As the dog becomes more accurate, reduce the number of steps, then finally the distance of the step to the point you are just pivoting in place.  This is not a particularlly fast fix, it may take up to 6 weeks of diligent work.  Another exercise is to leave your dog on a sit stay.  Move the leash distance away in one of four directions: straight forward, straight back, 90' right and 90' left. Call your dog to heel position.  You may need to move in place a bit to help your dog find heel.  Another option is to teach a touch to the center of your palm.  If you dog learns this behavior, no matter where the hand is held, you can use the palm of your hand to position your dog.  A dog that will lift it head to touch your palm while you are standing with your hand (palm down, fingers forward and elevated over where the dog's head would be) will straighten its spine and line up more readily.  One other option comes from an obedience great Patty Russo.  She worked on getting heel position and straight sits with an about turn and a halt. 
 
It was with great sadness that I read of Patty's death last week.  She was a major force in my reframing my training and my classes.  A tribute to her can be found on the Tails U Win website.

You've gotten some good advice already, but I might try luring dog with your treat into a sit, and giving it to him when he's sitting nicely.
 
I like to work random sits and get those nice and tucked, before asking for them in heel positon. Be sure your dog does not develop a habit of rocking back.