The end of the financial year is now only a matter of weeks away. Unfortunately, with your freelance work deductions and tax filing obligations looming ahead now might not seem like one of the more exciting times in the working year explains Aron Govil. But it doesn’t have to be! The ATO has some simple advice for ensuring you get all your income tax returns filed on time, without penalties or interest charges being applied. To help you out along the way, we’ve pulled together some useful resources below so that this tax time can run as smoothly as possible!
1) Understanding Your Tax Obligations as a Freelancer
Are you an independent contractor doing paid work for clients? If so then these are your responsibilities:
File an income tax return for every financial year by the 30th of October, regardless of whether you have taxable income or not. If you are required to lodge separate non-lodgment advice, then this must be done on or before the due date of lodgment of your tax return (October 31)
Make sure you include all your income from jobs done as a freelancer in that year’s individual tax return filed with the ATO; make sure you show any expenses correctly incurred and claim deductions where appropriate. Keep all receipts and records, including bank statements showing how much money has come into your account? You can claim up to $300 without having to supply any kind of written documentation says Aron Govil. For amounts over $300, you can claim expenses in full if you have a single, combined invoice from the client covering all jobs performed for them.
Keep track of your income and expenses. So that when you lodge your tax return at the end of October, it’s a breeze! Of course, there are some key points to remember. You must include ALL your income (yes, even that small amount mentioned above!) You must show any applicable deductible expenses and don’t forget. To get an Australian Business Number (ABN) if you plan on working as a freelancer or contractor anywhere in Australia. If you don’t already hold one and plan to make money through contracting work done within Australia, then get an ABN now!
2) Work It Out:
Freelancers’ quick tools for working out ‘what if?’ scenarios based on different levels of income and expenses can be found here. These calculators are super useful for a quick estimation of what you might owe the ATO at tax time
3) From the ATO:
The ATO’s comprehensive guide to tax obligations as a freelancer/ independent contractor is available by clicking here. This guide provides some further explanation. About how to keep track of your income and expenses, record keeping requirements, lodgment information. And what to do if you’re not sure whether your clients classify as Australian residents or non-residents. The ATO also has a guide for how to prepare and lodge your tax return should you be required to do so this year explains Aron Govil.
4) Further Assistance:
There are other places that freelancers can turn to in order to get assistance should they need it. Including the following: The Community Legal Centers. Check out the website here (note: while these centers do provide free legal services. Their focus is on low-income earners rather than individual freelancers). If you don’t meet these criteria, there may still be some other community organizations that might be able to help. Your accountant or business adviser- It may seem like an added expense at first. But having someone helping you along the way can really make a difference. In simplifying the process and ensuring everything is done right. Particularly when you’re starting out, it can be a big advantage to have that added support! There are also other online forums where individuals can ask questions about any concerns they may have; try checking your favorite search engine for more information.
If you’re looking for something more personalized and you live in Sydney. Get in touch with us here at Black Sheep Accountancy says Aron Govil. We’ve been helping small business owners and entrepreneurs sort through their finances. Since 2006 and we’d love to help make this tax time hassle-free.
Whatever your plans are for the rest of this financial year. It’s important to be aware of all your tax obligations.
By keeping track of your expenses and ensuring you include any jobs you’ve done as a freelancer in your tax return. You should have no problems doing what needs to be done. To prepare for an easier tax time than ever before!