Hi Fellow Aussies, I understand my tax obligations as an Aussie resident. I was wondering how other Aussies out there handle income made via internet. Income from Adsense eBay Affiliate programs etc I heard we only have to declare if you hit $50k in a year. Sounds dodgy but not sure. Also, for example if you do make $50k in a year and it cost you $20k to make ($30k profit) are you supposed to get taxed on that amount ? Does Aus govt track incomes from adsense and aff programs etc ? Cheers
I can't really your answer, but I can tell you that according to my Tax Agent I don't have to report my online income as it is classified as a 'hobby'. But then again I only make a couple of hundred dollars a month.
I've been reading the ato.gov.au site(aussie tax office) becuase I'm planning to set up as a freelance web designer around september/october. From my understanding, if your intent on making it a business .ie. business trading name/trademarking..generally that is considered a business even if you turn over $200 week or month. Plus adsense is commercial. ato.gov.au/businesses/content.asp?doc=/content/66952.htm&page=2&H2 The above link from the ato will help you determine if your a business or not. Yes you are right,if you earn over 50k in a financial year you need to register for GST. There is a 30 day thing,where if you are getting close to making over this,you have 30 days to register for GST. I've studied accounting in highschool,so I may not be totally qualified but I do understand a bit. Any income is taxable. I get the impression adsense is commercial venture. Think about it,your "selling" to some degree space on a website. Your transacting with other business's. I would say declare all monies earnt anyway...i think somewhere on the tax return you should be able to show its a hobby. Maybe you should contact the ato or an accountant. How much are you expecting to make in the first year? Also,if your freelancing (working for yourself no less than 90%),as of july 1st any super contributions are tax deductable..apart of 15% taxed when entered the super fund. So essentially if your in the 45% tax bracket(2007),you can reduce your tax to 0 on income,and 15% on super contributions. selling on ebay and you earn under 50k,is a hobby.(my aunty does it and verified this)..adsense+affiliates is tricky. Any other income stream would be considered a business. Hope some other members here will contribute to this thread... hope i helped you, arcanus
OK that clears up alot of things for me in regards to tax. I guess if you are planning on making alot of money through online venture then it would be a good idea to register yourself as a company so you can take advantage of the 30% flat tax rate for a business. Would you agree with that point ?
Company registration from what little i've read,requires 3 persons at a minimum,plus a load of paperwork and legal contraints and extra tax work. As a startup i don;t think anyone could make more than 50k + a year (ebay,adsense + affiliates and other services combined)..its possible..and i'm hoping for year 1 to earn at least $66000. Companies- You still have to pay your income tax on top of the company rate ..so say the company earns 150k,..you pay yourself 75k..thats the 45% tax bracket(for 2006/07) plus the company has to pay 30% on its earnings,the company pays 30% on the 150K .So thats 45k in tax(no deductions),plus your own tax total without deductions is about 33k,..so thats 78k in tax..remember its a separate entity. Whereas as a sole proprietor,150k earnt =$115,350 in tax...if you put that much in a super fund,your essentially only paying 15% on an amount that you would lose.$17302.50 (15%). <thats how much tax you would pay as a freelancer. I'm also assuming that other tax deductions ,to help the 150k. Hope this makes sense. So 150k earnt, $115350 (tax owed but put into a super fund,)total tax owed is $1730.50 (LOL imagine the interest on a super account with 115k...) I'm so glad laws have changed for sole proprietors regarding tax and super..I just hope I understand this clearly. I have read the ato,and i have a current book on super. Honestly i think freelancing/sole proprietor is the best after july 1st this year..tax wise. If you grow above 100k year..i think thats when i would start to look into a partnership(to help with balance of work)..or company structure then. Also note,the super changes don't apply if you work for a company,which means if you earn your income from an employer more than 10%,your considered and employee.That means super contributions aren;t tax deductable. I'm not going to register for GST straight away,but as soon as i make 45k i will,in the financial year. GST and BAS isn't that hard.
I am an Aussie and I know the taxation law well enough. Any money you earn must be declared at tax time unless its the sale of things like second hand goods. If you are making money online you have to declare it in your personal tax. If you have a company (pty ltd) then you declare the income as part of the income for the company and at the end of the year you get taxed 30% on your profit. The beauty of having the company setup is that it is far more "cleaner" to also declare and write-off any expenses incurred to make that income. So for example any advertising expenses etc... As a business (sole trader) you MUCT register for GST if you turnover more than 50k PA. I myself have 2 companies for which I run my ventures. If in doubt I suggest you set up a meeting with an accountant who specialises in business, companies and the taxation laws. Get some advice on whats best for your scenario.