Home – New Forums Money matters tax for the sole-trader and part-time worker

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  • #964293
    Beth
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    Hi

    Just wondering if anyone can throw some advise my way! I’m new to “flyingsolo”

    I’m currently looking into setting myself up as a sole-trader. For the last year I’ve been selling some fine-art photography and would like to develop this avenue further, as well as move into some other areas of photography and writing. I’m sticking with my part-time employment (unrelated to photography), to provide a safety net and test the waters so to speak! My part-time job is sure to provide the bulk of my income, so would this have any impact on what I can and can’t claim as tax deductions in my tax returns. I feel like I’ve heard that you can’t claim expenses (eg courses, equipment, marketing expenses, etc) unless it is your main source of income. Would setting up an ABN, etc become financial step back for me?

    I’ve been searching the web in vain trying to find the answer to this – so any insight would be hugely appreciated!

    cheers
    Lou

    #1004532
    Heidi Price
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    Hi Lou and welcome :)

    You mentioned that you have done some research on the net – just wondering if you have been to the ATO (ato.gov.au) site? There is a fair bit of info on there about ABN’s, allowable deductions, BAS’s etc. A good starting point is the topics page: [URL]http://http://ato.gov.au/corporate/content.asp?doc=/content/00171178.htm&mnu=44739&mfp=001/002[/URL]

    They also have a free (come to you) business advisory service.

    Make sure you look through both the individuals section and well as the business.

    From personal experience, several years ago I applied for an ABN as a sole trader, and it was a hassle free process. I opted for quartery BAS reporting – which took me about five minutes to fill out (providing you keep up to date with your paperwork as you go).

    Having the ABN gave me the option to work as a freelancer while studying and at the time still qualify for centrelink payments as a single parent still finding my feet :)

    Heidi

    Heidi

    #1004533
    ray_223
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    Lou, post: 3537 wrote:
    Hi

    I feel like I’ve heard that you can’t claim expenses (eg courses, equipment, marketing expenses, etc) unless it is your main source of income. Would setting up an ABN, etc become financial step back for me?
    Lou

    Hi Lou,

    Welcome to the forums.

    Your “feeling” is definitely not true.
    If you are creating income, then any expense associated with that income is tax deductible. There are some regulations in place that specify you must be making (or attempting) to make a profit. This stops people offsetting other income.
    Definitely check out the ATO website.
    Also consider investigating getting feedback/ideas from a business advisory service. A starting point would be:
    http://www.beca.org.au/
    This is usually free and they will also have other contacts which may be of help (e.g. an accountant).

    Also double check any advise you get from a forum or other website (including mine) with the relevant government agency for accuracy.

    All the best and good luck

    #1004534
    ray_223
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    • Total posts: 594
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    Lou, post: 3537 wrote:
    Hi
    Would setting up an ABN, etc become financial step back for me?
    Lou

    Forgot to add …
    having an ABN won’t help with your personal income tax in any way.
    An ABN is just a business register with optionally being able to register for GST.

    You should definitely have an ABN if you are considering doing business in Australia.
    You “may” wish to apply to be a GST registered business depending on your individual circumstances.

    What you may be referring to is “Business Structure”, e.g. sole trader, partnership or company:
    See: http://www.smartcompany.com.au/Start-up-Guide/Choose-a-business-type.html for a summary.

    #1004535
    Beth
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    Hello Heidi
    Thanks a million for these links! I have looked at the ATO site and gathered some info, but it’s just not the same as throwing a question directly at someone! I will check out those links – it will be tomorrow’s research project, and probably pages I have not yet found. I like the idea of the business advisory service – sounds great.
    thanks again, really appreciated :)
    Lou

    #1004536
    Beth
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    ray_223, post: 3546 wrote:
    Hi Lou,

    Welcome to the forums.

    Your “feeling” is definitely not true.
    If you are creating income, then any expense associated with that income is tax deductible. There are some regulations in place that specify you must be making (or attempting) to make a profit. This stops people offsetting other income.
    Definitely check out the ATO website.
    Also consider investigating getting feedback/ideas from a business advisory service. A starting point would be:
    http://www.beca.org.au/
    This is usually free and they will also have other contacts which may be of help (e.g. an accountant).

    Also double check any advise you get from a forum or other website (including mine) with the relevant government agency for accuracy.

    All the best and good luck

    Hi Ray
    Oh good news! So is what you’re saying that I can claim expenses related to photography, and they will be separate and uninfluenced by my part-time income? Thank you for these links – I will check these out tomorrow. I’m already becoming clear just from these few posts, so thanks a million – I’m so impressed!

    #1004538
    Heidi Price
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    Hey again Lou!

    What state are you in? Just in case i come across anything else relevant :)

    Heidi

    #1004539
    ray_223
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    • Total posts: 594
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    Lou, post: 3554 wrote:
    Hi Ray
    Oh good news! So is what you’re saying that I can claim expenses related to photography, and they will be separate and uninfluenced by my part-time income? Thank you for these links – I will check these out tomorrow. I’m already becoming clear just from these few posts, so thanks a million – I’m so impressed!

    Hi Lou,

    The more important issue though is that ALL income you generate (less expenses) will be combined and you pay income tax on the total. It doesn’t matter where the income came from (assuming a sole trader or partnership).
    Also, you can’t offset expenses for your photography business against your part time job.
    Again, if you have any doubts I’d suggest seeing an accountant or ATO officer.
    Through the BEC I was referred to an accountant for a free visit. I also had 2 meetings with an ATO officer to sort out a number of issues I had early on.
    All of that was free and anyone would be crazy not to use the free resources available.

    #1004540
    Beth
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    • Total posts: 12
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    Heidi Price, post: 3560 wrote:
    Hey again Lou!

    What state are you in? Just in case i come across anything else relevant :)

    Heidi

    Hi Heidi
    I’m in WA (Perth)
    thanks again!!

    #1004541
    Beth
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    • Total posts: 12
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    ray_223, post: 3561 wrote:
    Hi Lou,

    The more important issue though is that ALL income you generate (less expenses) will be combined and you pay income tax on the total. It doesn’t matter where the income came from (assuming a sole trader or partnership).
    Also, you can’t offset expenses for your photography business against your part time job.
    Again, if you have any doubts I’d suggest seeing an accountant or ATO officer.
    Through the BEC I was referred to an accountant for a free visit. I also had 2 meetings with an ATO officer to sort out a number of issues I had early on.
    All of that was free and anyone would be crazy not to use the free resources available.

    Hi Ray
    thanks for adding this too…it’s all helping so much and I’m getting a better understanding through what you’re saying. I had a look at BEC and it lead me to an organisation quite close to home, so that will be something to follow up on.
    cheers – really appreciated!
    :) lou

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