Confused by ABNs and GST

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September 26, 2011 at 11:54 pm #975237
VividVisuals
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Hi All

I am a full time IT person for a company, and by night I wear a cape and avenge wrong doings. Umm, actually, no, by night I do web development, etc for small businesses and friends.

I have had an ABN for a long time, and have always provided tax invoices, charged GST, filled out BAS forms, etc.

However I do very little work at night now – so it really would be defined as a hobby. The issue here is that a large company has asked me to do some work for them – so what do I do?

Do I provide them an invoice, with no GST amount on it, and a statement stating that the work is being done as a hobby, and they don’t have to with hold anything? And the income from this work is just added to my normal tax return?

I de-registered for claiming GST earlier in the year, as I never have anything to claim back either.

You would think it would be easier….or I could get my head around it!

Cheers (and sorry if it has been asked a million and one times)
September 27, 2011 at 3:29 am #1073139
MattR
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Easy answer, give them an invoice, they are not likely to swallow the idea that you’re doing it as a hobby, and quite frankly nor are the ATO.

If the income side of it is low, then I am sure you will have enough deductions to reduce it to nil. If it’s not nil, then probably not a hobby either.
September 27, 2011 at 4:31 am #1073140
geegee
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You can still have an ABN and not be registered to collect GST, as long as your turnover is under $75,000. You provide an invoice stating you are not registered for GST and therefore have not included it. I doubt if you would be classed as a hobby though. Hobbies do not issue invoices!
September 27, 2011 at 5:53 am #1073141
bridiej
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MattR, post: 91814 wrote:

Easy answer, give them an invoice, they are not likely to swallow the idea that you’re doing it as a hobby, and quite frankly nor are the ATO.

If the income side of it is low, then I am sure you will have enough deductions to reduce it to nil. If it’s not nil, then probably not a hobby either.

I don’t know, my friend made a fortune as a Body Shop at Home consultant and the ATO classed it as a hobby. Crazy.
September 27, 2011 at 10:20 am #1073142
On-the-move
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Refer to the following link for the definition of a hobby versus a business. http://www.ato.gov.au/content/38509.htm

Richard
Darcy Bookkeeping & Business Services

P: 1300 728 875
E: richard.darcy@darcyservices.com.au
W: http://www.darcyservices.com.au
September 27, 2011 at 2:14 pm #1073143
Anonymous
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VividVisuals, post: 91781 wrote:

I am a full time IT person for a company, and by night I wear a cape and avenge wrong doings. Umm, actually, no, by night I do web development, etc for small businesses and friends.

Hi VV,
That’s one of the most original introductions I’ve read for a long time

Welcome to the forum, and I hope you answers you’ve received are helpful.

Jayne
September 27, 2011 at 8:47 pm #1073144
MattR
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bridiej, post: 91838 wrote:

I don’t know, my friend made a fortune as a Body Shop at Home consultant and the ATO classed it as a hobby. Crazy.

Did they get a Private Ruling or was it a discussion over the phone? Again, I would be suprised with an ATO response like that.

Generally the ATO is pretty pragmatic; if it looks like a shoe, fits like a shoe, smells like a shoe, then it’s generally treated as a shoe. And if it aint a shoe but it earns income, stuff it, tax it anyway.
September 28, 2011 at 1:01 am #1073145
bridiej
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No idea, I just remember at the time I was pretty disgusted that she earned 10 times what I did in that year and paid no tax!
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