Home – New Forums Money matters How does Sole Trader draw money? Reply To: How does Sole Trader draw money?

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Thought I’d return and summarise what the accountant told me.

Re how to take money from the business, as some others here have posted, put this down as drawings and initially do not consider any amount taken as affecting personal income or family tax benefits, i.e. he said use this as a mindset thing, and don’t consider withholding roughly 30% of the amount drawn out, just leave it til the end of the year to calculate.

He said where this comes into play is if the business posts a net profit, that net profit gets put on top of my full time wage taxable income which then affects family tax benefits. The FTBs are calculated on a predicted annual income, so he recommended I keep a close eye on how the business is travelling throughout the year and update the predicted amount where necessary. He said if I trade at a loss for the year, and the ATO puts me down as a hobby, then the income I derive from the business is not taxable and has no affect on FTBs etc. If the ATO classifies me as a business and I trade at a loss, then the loss is tax deductible for that financial year only.

Hopefully this is how everyone else sees it?