Home – New Forums Money matters Tax questions from a novice …

  • This topic is empty.
Viewing 7 posts - 1 through 7 (of 7 total)
  • Author
    Posts
  • #983466
    JK2013
    Member
    • Total posts: 4
    Up
    0
    ::

    Hi Flying Solo community

    I’ve got 3 novice questions:

    * I am a sole trader and have earned $155,000 so far this year with about $50,000 of deductions/expenses. I’ve set aside about $50,000 to pay tax, but wondering if there’s any quick & easy way (other than waiting for my accountant to work it out) that I can work out what my liable tax is likely to be?

    * Also, my husband is a full-time student and on occasion does some unofficial sub-contracting for me. It makes sense for me to “pay him” to create an expense against the business and reduce my tax, but is that allowed? Can you pay a family member let alone a husband as a sub-contractor? (He has his own BAS number)

    * Then, I’m having a baby in 10 weeks, which means my husband and I both won’t have any active income coming in. I’m looking at the Parental Leave Pay provided by government as an option for the first few months.

    Does anyone know:
    a) You must earn less than $150k in previous financial year – does it matter if some of my invoices are paid in the next financial year (one of my contracts is 60 days payment terms)
    b) Is $150k adjusted taxable income (ie income after expenses?)

    Any help on above would be greatly appreciated.
    JK

    #1142468
    JacquiPryor
    Member
    • Total posts: 2,344
    Up
    0
    ::

    Hi JK,

    If you are operating as a sole trader, earning 155K per year then you should also be registered for GST. This is required if you are turning over more than 75K so keep that in mind if you haven’t already registered.

    You can view income tax rates at the ATO website here: http://www.ato.gov.au/individuals/content.aspx?doc=/content/12333.htm&mnu=42904&mfp=001/002

    If your taxable income is $80,000 – $180,000 then your tax will be $17,547 plus 37c for each $1 over $80,000 according to their site.

    * Also, my husband is a full-time student and on occasion does some unofficial sub-contracting for me. It makes sense for me to “pay him” to create an expense against the business and reduce my tax, but is that allowed? Can you pay a family member let alone a husband as a sub-contractor? (He has his own BAS number)

    To the best of my knowledge you can contract a family member. But, you say “unofficial sub-contracting”… if you want it to be kept off the books then it’s going to be difficult to pay him through the business and claim the expense I would imagine. However, if he has an ABN then he can invoice you and you can pay through the business (he’ll then need to claim the income in his taxes).

    Then, I’m having a baby in 10 weeks, which means my husband and I both won’t have any active income coming in. I’m looking at the Parental Leave Pay provided by government as an option for the first few months.

    Does anyone know:
    a) You must earn less than $150k in previous financial year – does it matter if some of my invoices are paid in the next financial year (one of my contracts is 60 days payment terms)
    b) Is $150k adjusted taxable income (ie income after expenses?)

    Congratulations! I am due to have a baby in 2 weeks so have been looking into exactly this sort of stuff… firstly, make sure you do your sums correctly. Depending on when you anticipate going back to work then you may be better off financially to claim the baby bonus instead of their Parental Leave Pay.

    If you are paid in the new financial year, I don’t think that will count to your ‘previous year’ income? You wouldn’t be claiming this in your 2012/2013 tax return if you haven’t yet been paid I wouldn’t have thought? So, it should really be simply your income actually received for that financial year I think. Hopefully an accountant or similar will be along to confirm this point.

    According to the million pages I printed from Centrelink website recently – you are eligible for Parental Leave payments (amongst other eligibility criteria) if you have an individual adjusted taxable income of $150,000 or less in the financial year prior to the date of birt of your child – and, you must be on leave or not working from the time you become the child’s primary carer until the end of your payment period. There is a note in the information that says “you must be eligible on each day from the day you become the primary carer of the child until the end of your Paid Parental Leave period”, which I understand means you can’t (for example) start working 1 day per week during that period etc. There are also work related tests to be eligible – such as you have to have worked at least 10 months of the 13 months prior to the birth of your child, and have worked at least 330 hours in those 10 months with no more than an 8 week gap between 2 working days.

    I found further information – including forms at http://www.humanservices.gov.au/customer/services/centrelink/parental-leave-pay if that helps.

    All the best :)

    #1142469
    JK2013
    Member
    • Total posts: 4
    Up
    0
    ::

    Thanks Jacqui and congrats to you too!

    Yes, I’m registered for GST.

    Thanks for the other info. I’ve been scrolling the Centrelink info too. It’s a language to its own, it seems!

    I did read that if I return to work, that I can transfer the Parental Leave payment into my husband’s name if he also qualifies against the eligibility criteria. As he’s studying full-time, I might do something like this so I can return to working 1-2 days from home, when bub is settled in.

    Is there much on this website about women as sole bread-winners becoming mothers! I’m trying not to feel daunted!!!

    #1142470
    JacquiPryor
    Member
    • Total posts: 2,344
    Up
    0
    ::

    Hi JK,

    That’s a good idea, to transfer the payments over to your husband if you can.

    I wrote an article for Flying Solo a little while ago about preparing my business for bubs coming along… This is my first baby and like you, absolutely feeling daunted about getting things ready, and how it’s all going to impact the cash-flow/income!

    The article can be found here if of interest – and, it received a number of useful tips from other mums from around the place.

    Hope it helps :)

    #1142471
    JK2013
    Member
    • Total posts: 4
    Up
    0
    ::

    Thanks Jacqui

    Most helpful – will read tonight.

    Might help me sleep.

    :)

    #1142472
    Jodie McLeod
    Member
    • Total posts: 345
    Up
    0
    ::

    Hi JK,

    Welcome to the Flying Solo forums!

    Wow – you’ve got some massive challenges ahead, but all good ones :)

    We don’t have anything specifically written on running a business as a new mum and the sole bread winner, though I’m always on the lookout for new article ideas and I reckon I have a few writers in mind who might be able to help with this one. In the meantime, all of our work and family related articles can be found here.

    Best of luck!

    Jodie

    #1142473
    mr031
    Member
    • Total posts: 10
    Up
    0
    ::

    Wouldn’t it be wise to put some in your super, spend some on the business and keep your tax bracket under 80k? I am in the same boat as you, this is my first year in business.

Viewing 7 posts - 1 through 7 (of 7 total)
  • You must be logged in to reply to this topic.