Do i need an ABN?
I have a full time job and a side job managing a website. I spend about 12 hours a month working on the website and was told to send him an ‘invoice’ so does this mean i am a contractor? I personally think it is a hobby but my friends said to open an ABN ‘just to be safe’. If so how do i declare this additional income when i don’t have an ABN.
If the person that you are invoicing is looking to claim a tax deduction for the amount they pay you then they would require a tax invoice from you and for that tax invoice to be valid it would need to have a valid ABN included.
I’m sure there are many costs that you would be incurring in order for you to generate that income that you would consider prior to you including that income in your tax return. Good luck,
Kind regards, David
is your employer the same person you are doing your website management for???? If you are doing work for your employer but also as a subbie, that is going to smell a bit off to the ATO.......but that is really a matter for your boss, not you.
If you are a genuine subbie, and you DONT have an ABN, your client is required to withhold 47% of the payments and remit this to the ATO......that in itself is pretty good incentive for you to get yourself an ABN
IT consulting is next on the list to be subject to the Taxable Payments Reporting regime.....this is where your clients HAVE to report your details and the amounts paid to you to the ATO......its an integrity measure designed to catch people out who claim their business is a "hobby"
And I can give you a solid gold guarantee Tony: its not. When (not if) the ATO catches up with you, they will spank you HARD. And then hit you with penalties to encourage you to report ALL your income next time. So be warned mate, the ATO is becoming EXTREMELY adept at matching data, and IT professionals are very high on the ATO hit list.
In relation to your deductions, you will be also subject to the Personal Services Income rules.....where your deductions are limited to the same deductions as allowed for an employee......so the list of things you can and should claim as a tax deduction may not be as extensive as you might think!!!!
SOOOOOOO......................bite the bullet, make an appointment and go see someone with the skills and expertise to help you. In my experience IT gurus are extremely good at that white mans magic which makes computers work......but sometimes they try to fool themselves that they know enough to dodge a bit of tax with some IT smoke and mirrors. Trust me mate, the ATO is ALLLLL over every trick you can come up with, they have seen it all, and they have $130million EXTRA to splash on tax audits than they had 2 years ago.
Get yourself set up properly, find out what you CAN and CANNOT do, and then the outcome of an ATO audit will be much less painful than if you just wing it. Preferrably someone with the right letters after their name mate.....CA or CPA. It will cost you a bit for the advice, but it will save you bucketloads in the long run.
Please believe me, you WILL get someone who will tell you this: "ahhhhhh dont listen to that panic merchant Brendan Curran, I aint never seen an IT guy cop a full tax audit......so dont worry about that garbage he was banging on about" .............that person is living in the past. The ATO is gunning for individuals and micro businesses who are not doing the right thing. They have the tools. They have the technical expertise. And now they have an extra $130million to pay auditors to ruin your day. Its not a case of "IF"........its a case of "WHEN"