Financial Sense: How Taxes Work for Talent
We are so proud to be a market place that gives you the power, freedom and flexibility to choose the jobs that are right for you. And, while it’s great to be on the job earning your keep, it’s important to make sure that you are mindful of taxes. So, we’ve prepared some frequently asked questions that might assist you. As we are not financial planners, or certified accounts, we cannot give you financial advice and recommend that you see a fully certified tax consultant if you have any questions about your taxable income. Click here to visit the ATO.
Do I need to pay tax on income received from theright.fit?
Yes, you must declare all income earned. For example, if you have a full time job and have freelanced with us recently then you must declare the income earned on top of your full time job.
How to make income from theright.fit taxable.
To make this income taxable, you need to keep a record of all the jobs you do on our platform. That income needs to be disclosed as a business income on your tax return. The record should include the gross amount (job price) that your client pays you, not the total amount you receive after we take out the service fees.
What can you generally deduct from income made on theright.fit
You can claim expenses that are incurred while you are generating income on theright.fit. For example a deduction might look like:
- You can claim an instant tax deduction for all capital assets acquired for use in your business with a cost of $20,000 or less. This relief is available until 30 June 2017. This is great for purchasing items like computers, phones, tablets, tools and even some motor vehicles.
Taxable income deductions can be applied to the business use proportion of:
- Costs of traveling to and from a job including: parking, petrol, public transportation, and accommodation.
- Mobile phone bills
- Equipment relating to your talent
- Tax agent/accounting fees
- Costs of running a home office
Car expenses. If you use your care for traveling to and from jobs you are able to claim this in a couple of ways.
- Cents per kilometre.
This method is only available for distances up to 5,000km. You can’t use it if you cover more than 5,000 business km’s.
This method incorporates all car expenses including petrol, servicing, depreciation, etc. You can make no further claim
Your claim is based on the business use percentage of each car expense, which is determined by a log book that must have been kept for a minimum 12 week period.
This log book must be updated every 5 years.
You can claim all expenses that relate to the operation of the car, at your percentage of business use, as established from your logbook.
- Deductions cannot be claimed for:
Fines (parking, speeding, etc), clothing other than safety clothing, meals, drinks, etc purchased whilst on the job.
You must be able to prove that this money was used in relation to the job. So ensure you keep your invoices, receipts, and bank statements for your next accounting visit.
What happens after I claim my deductions?
There are two likely outcomes:
- You will receive an income surplus. This happens when your expenses exceed your income.
- You will be taxed. This happens when your income exceeds your expenses.
How can I stay on top of my taxes?
You need to lodge an income tax return every financial year. This needs to be submitted by 31 October 2016 if you do your tax return yourself. If you use a tax agent like H&R Block, you have an extended period to lodge which could run as late as 15 May 2017.
What happens if I lodge it incorrectly?
The ATO closely monitors all tax payers with a particular emphasis on freelancers and small businesses. So it’s essential that you fully and accurately disclose all your income earned (and expenses!) on theright.fit. Failing to do so could mean incurring the penalties set by the ATO.