With Australia officially in recession, it’s no wonder that freelancing is one of our fastest-growing sectors.
Matt Barrie, CEO and Chairman of Freelancer.com, said, “Since the Covid-19 pandemic proliferated in the last 30 days of Q1 2020, Freelancer.com has seen exponential growth in user sign-ups, suggesting a strong desire for individuals to get back to work and, in some cases, to do so on their own terms.”
Now while it makes great sense to capitalise on your skillset by becoming a self-employed freelancer, this also means it is your responsibility to understand the taxation requirements that come with your newfound income stream.
Here are our top 15 tax tips you need to make your end of year tax easy:
1. Make sure you have an Australian Business Number (ABN).
2. Register for GST if you will be earning over $75,000 per annum.
3. Use separate bank accounts for personal and business expenses.
4. Make sure all income is recorded or goes through your bank accounts.
5. Know your basic claimable deductions BEFORE you purchase (so you use the right account).
6. Claim your Personal Development expenses. They are a legitimate deduction when you are a freelancer.
7. Discuss your equipment purchases with your accountant to determine if they can be fully claimed or must be depreciated over several years.
8. KEEP YOUR RECEIPTS.
9. Keep a travel log of vehicle-related use, so you can apportion and claim your car expenses.
10. Know what portion of home office-related expenses you can and cannot claim.
11. Set aside money for tax.
12. Record your superannuation contributions.
13. Use book-keeping/accounting software to keep on top of everything.
14. Know if your services are considered Personal Services Income (this affects your deductions).
15. Hire an accountant.
And although not classified as Freelancing income, remember that your Job Keeper payments must be reported as income on your tax return as well.
Now that you know what you should do to ensure your end of year tax goes easily for you, it’s time to capitalise on this booming industry and start sharing your expertise with the world. And if you haven’t started yet, maybe this is the prompt you need.
At VBA we specialise in strategic tax advice, offering tax and financial reporting for individual income earners, family businesses, tradies and construction companies.
Victor Bimrose Accountancy Pty Ltd (ASIC No. 1259423) ABN 53 010 957 294 is a Corporate Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361.
Mark Foxley-Conolly (ASIC No. 1259421) is a Limited Authorised Representative of Merit Wealth Pty Ltd ABN 89 125 557 002, Australian Financial Services Licence Number 409361
General Advice Warning: This information has been prepared without taking into account your objectives, financial situation or needs. Because of this, you should, before acting on this information, consider its appropriateness, having regard to your objectives, financial situation or needs.