Earn
Important tax tips every freelancer should know
Anyone who qualifies as an Australian resident for tax purposes is required to lodge and pay tax by end of financial year (EOFY).
Important tax tips every freelancer should know
Anyone who qualifies as an Australian resident for tax purposes is required to lodge and pay tax by end of financial year (EOFY).
For freelancers, this means taking charge of your personal finances and business expenses to ensure that the Australian Taxation Office (ATO) doesn’t come after you for tax evasion. Fortunately, there are ways to ensure you meet your EOFY tax obligations.
Consider the following tax tips for freelancers to help you stay on top of your tax obligations.
-
Apply for TFN
Apply for a tax file number (TFN) regardless of your employment arrangement, as you’re required to lodge a tax return if you earn an income in Australia. A TFN isn’t necessary to secure a contract, but it can save you money.
A TFN will come in handy if you have an arrangement with a client that qualifies you as an employee. Without a TFN, you may be taxed at the highest marginal rate of 45 per cent.
Likewise, your super contributions will not be eligible for the concessional rate of 15 per cent. Contributions will be taxed at 34 per cent. -
Apply for an ABN and GST
If you’re serious about freelancing as a sole trader full-time, consider applying for an Australian Business Number (ABN) to avoid extra tax.
Without an ABN, your client may be required to withhold 47 per cent of their payment.
Applying for an ABN is free, and you can do it online with the Australian Business Register.
If your freelance business has an annual turnover greater than $75,000, you’ll need to register for Goods and Services Tax (GST). -
Lodge your income tax return
Don’t forget to lodge your tax return before the end of the financial year (EOFY).
Freelancer tax may seem more complex since you’ll have to keep track and file everything yourself, but it’s still important to avoid missing the deadline. You can always hire a tax professional who can help you with your tax forms and provide lodgment advice. -
Apply eligible concessions
The ATO allows freelancers and sole proprietors or traders to claim a variety of tax deductions in their tax return. -
Keep your receipts
According to the ATO, “you can claim a tax deduction for most expenses you incur in carrying on your business as long as they directly relate to earning your assessable income”.
This means you may claim deductions on your business-related purchases when you lodge your tax return. However, you need to provide evidence that they are really business expenses. -
Consult a tax expert
A tax professional can help you maximise the legitimate tax deductions you may claim.
For instance, they may identify how much GST credits you can claim for certain business activities. Likewise, they can figure out how much tax you can claim for a shared personal and business equipment. -
Consider entering the PAYGI instalments system
The PAYGI system automatically deducts tax payments from your elected account periodically and forwards the payment to ATO.
Note that the deducted amounts are simply estimated taxes based on your previous year’s tax bill – it doesn’t take your current business activities into account yet. Once you lodge your tax return when tax season rolls in, any excess payment you made will be refunded. -
Separate your personal and business accounts
Tax professionals and long-time freelancers recommend keeping your personal finances and business savings accounts separate.
Separating your business income and expenses can make it easier for you to retrieve the information you need to provide in your tax return and claim deduction on them.
Should ATO question certain deductions or information in your tax return, it will be easier to provide the necessary evidence.
Another reason why the separation of assets and finances is important is to avoid debtors from making a claim on other assets.
Explore nestegg for more tax tips.
RELATED ARTICLES
About the author
About the author
Side hustle
CyberPath initiative aims to bolster Australia's cybersecurity workforce
In a significant move to strengthen Australia's cybersecurity workforce, the Australian Computer Society (ACS) has announced the launch of a new initiative, CyberPath: Paving the Way Forward for Cyber ...Read more
Side hustle
NSW SES launches inaugural flood rescue challenge to strengthen skills and capability
In a concerted effort to bolster their life-saving skills, more than 150 volunteers from the New South Wales State Emergency Service (NSW SES) converged at the Penrith Whitewater facility over the ...Read more
Side hustle
Australians Sitting on a Goldmine of Clutter Worth Over $1,300 Per Household
Australians are sitting on a potential goldmine of unused and unwanted items, with new research revealing that the average Aussie household has $1,349 worth of clutter that could be turned into cashRead more
Side hustle
PayPal's AU$1.5 billion boost empowers Australian small businesses
In a significant development for Australian small businesses, PayPal Australia has announced a major milestone, revealing that its PayPal Working Capital program has provided over AU$1.5 billion in ...Read more
Side hustle
From passion to profit: Turning your hobby into a side hustle in Australia
In today’s economic climate, finding ways to supplement your income can not only provide financial security but also offer an opportunity to pursue your passions. For many Australians, turning a hobby ...Read more
Side hustle
Thriving in the digital age: Maximize your earnings with remote work
The global shift towards remote work has opened up a myriad of opportunities for professionals in Australia and around the world to redefine their work-life balance while maximizing their earnings ...Read more
Side hustle
Side hustles that can turn into full-time careers
In the age of the gig economy, the traditional 9-to-5 workday is no longer the only pathway to success. Read more
Side hustle
All-female start-up helping consumers monetise their data
ChainCollective announced its soft launch on International Women’s Day. Read more
Side hustle
CyberPath initiative aims to bolster Australia's cybersecurity workforce
In a significant move to strengthen Australia's cybersecurity workforce, the Australian Computer Society (ACS) has announced the launch of a new initiative, CyberPath: Paving the Way Forward for Cyber ...Read more
Side hustle
NSW SES launches inaugural flood rescue challenge to strengthen skills and capability
In a concerted effort to bolster their life-saving skills, more than 150 volunteers from the New South Wales State Emergency Service (NSW SES) converged at the Penrith Whitewater facility over the ...Read more
Side hustle
Australians Sitting on a Goldmine of Clutter Worth Over $1,300 Per Household
Australians are sitting on a potential goldmine of unused and unwanted items, with new research revealing that the average Aussie household has $1,349 worth of clutter that could be turned into cashRead more
Side hustle
PayPal's AU$1.5 billion boost empowers Australian small businesses
In a significant development for Australian small businesses, PayPal Australia has announced a major milestone, revealing that its PayPal Working Capital program has provided over AU$1.5 billion in ...Read more
Side hustle
From passion to profit: Turning your hobby into a side hustle in Australia
In today’s economic climate, finding ways to supplement your income can not only provide financial security but also offer an opportunity to pursue your passions. For many Australians, turning a hobby ...Read more
Side hustle
Thriving in the digital age: Maximize your earnings with remote work
The global shift towards remote work has opened up a myriad of opportunities for professionals in Australia and around the world to redefine their work-life balance while maximizing their earnings ...Read more
Side hustle
Side hustles that can turn into full-time careers
In the age of the gig economy, the traditional 9-to-5 workday is no longer the only pathway to success. Read more
Side hustle
All-female start-up helping consumers monetise their data
ChainCollective announced its soft launch on International Women’s Day. Read more
More articles
OUR PLATFORMS AND BRANDS
EVENTS AND SUMMITS
- ACE25 The Accounting Conference and Exhibition
- Australian Accounting Awards
- Australian AI Awards
- Australian Aviation Awards
- Australian Aviation Summit
- Australian Broking Awards
- Australian Cyber Awards
- Australian Cyber Summit
- Australian Defence Industry Awards
- Australian Law Awards
- Australian Law Forum
- Australian Space Awards
- Australian Space Summit
- Better Business Awards
- Better Business Summit
- Broker Innovation Awards
- Broker Innovation Summit
- Budget Summit
- Corporate Counsel Summit
- Defence & National Security Workforce Awards
- Lawyers Weekly 30 Under 30 Awards
- Commerical Finance Awards
- New Broker Academy
- Partner of the Year Awards
- Partner Summit
- REB Awards
- Rising Star Awards
- SME Bootcamp
- Women in Finance Awards
- Women in Finance Summit
- Women in Law Awards
- Women in Law Forum
PODCASTS
- Accountants Daily Podcast Network
- Australian Aviation Podcast Network
- Broker Daily Podcast Network
- Defence Connect Podcast Network
- HR Leader Podcast Network
- REB Podcast Network
- Space Connect Podcast
- The Adviser Podcast Network
- The ifa Show
- The Lawyers Weekly Show
- The Smart Property Investment Show
LEARNING AND EDUCATION
MOMENTUM MARKETS NETWORK
STAY CONNECTED
Make your nest egg grow. Register now for nestegg updates.