AUSSIES - Do you have an ABN and other tax questions

by JimmyRose

Posted: 14 years ago 19 replies

INTERNET MARKETING

A question for all the other aussies in here.

I was about to apply for an ABN but I'm not sure if I need to, or if it is even worth it. Since I still work full time and don't make all that much from IM, I'm sure it can easily pass up as a hobby.

From what I understand, as a hobby, you don't get taxed but you can't claim any of the stuff you've purchased. As a business, I can claim all expenses but get taxed on income. Since I reinvest everything that I earn, either way I will probably end up equal, financially. This is assuming that things like outsourcing, software and that kind of stuff with only paypal receipts can be claimed. Is that the case?

Then there's complication like is outsourcing counted as paying an employee/contractor? That would mean you would have to apply for PAYG as well, right? Then there's GST etc etc.

It all sounds pretty complicated for something I'm not making a living off yet, so I'm swinging towards not bothering with the ABN route. One plus would be that I could purchase .com.au domain names, but I'm not sure if I should bother. My IM seems to fit various dot point for both a hobby and a business so it seems I could go either way.

As another side note, as a business, no more than 80% of your income can come from one source. I think my adsense makes up for just over 80%, so that might disqualify me anyway.

Do you have an ABN?

#abn #aussies #questions #tax

PaulaC 14 years ago

You are making it more complicated than it is.

We have an ABN and we outsource and we make money from Adsense, Amazon and various other methods and the accountant deals with it all. We really don't have to think about it.

My advice is to see an accountant and get those questions answered so you can get on with running your business. No one should really be giving you this sort of advice other than a tax professional. It will be worth it.
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Audrey Harvey

14 years ago

I have a company and ACN. I agree with Paula, this is the sort of thing you should hear straight from an accountant rather than on an internet forum. Where in Brisbane are you?

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JimmyRose

14 years ago

Yeah fair enough. Haven't actually gone to an accountant before and just done it all myself so was a bit reluctant to start shelling out. Might just have to go have a consultation.

I'm in Kangaroo Point at least for the next couple of months. I take it you're a Brisvegan too?

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Audrey Harvey

14 years ago

Originally Posted by JimmyRose

Yep, Burpengary here... I have a good accountant but a bit too much of a commute for you :-)

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Daniel Scott 14 years ago

Jimmy,

I used to live in Vulture St... small world.

Legally and technically yes, you should have an ABN.

But I didn't bother until I was making money from this business. Nor did I bother reporting my (non-existent) income.

Of course now I make a living off this stuff I do all the tax etc, which sucks even WITH an accountant.

But that's life, right?

Personally I wouldn't worry unless you're making money. I don't think the ATO would give a crap even in the extremely unlikely event they found out.

Having said that I'm not a lawyer and this isn't legal advice.

-Dan
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Daniel Scott

14 years ago

If you *do* need an accountant, I have a brilliant one in Underwood...

-Dan

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JimmyRose

14 years ago

Cool to see some other Brisbane dwellers here.

Originally Posted by Audrey Harvey

Yep, Burpengary here... I have a good accountant but a bit too much of a commute for you :-)

Haha yep.

Originally Posted by Daniel Scott

If you *do* need an accountant, I have a brilliant one in Underwood...

-Dan

I think all I'll need first up is a short consultation. May be worth it, just depends how much they charge?

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AndrewCavanagh

14 years ago

Yes if you're not making any real profit you can probably just treat your business as a hobby for tax purposes.

But if you're serious about making money then sooner or later you'll have to deal with the tax issues which aren't that complicated.

The good thing about an online business is the tax is fairly simple.

If you're taking income in US dollars the most complicated thing you have to do is use the tax office exchange rates to convert those US dollars to determine income and expenses in Australian dollars.

The good news is as long as you're keeping some kind of records this is a problem you can fix as soon as you have a good year where you make some profits.

Just pay tax after your first profitable financial year.

Getting an ABN number is simple and doesn't commit you to doing anything so you should probably do that rather than wait.

And as some other people have mentioned having a talk to an accountant will be quick and that expert advice should help relieve any anxieties you have.

Kindest regards,
Andrew Cavanagh

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Bellthorpe

14 years ago

Originally Posted by AndrewCavanagh

If you're taking income in US dollars the most complicated thing you have to do is use the tax office exchange rates to convert those US dollars to determine income and expenses in Australian dollars.

I've never heard it put that way before.

As a cash accounting business (as opposed to accrual accounting), I take revenue (and expenses) to book when the money is remitted into Australia or paid.

Take PayPal, for instance. Although it might be paid into my PayPal account in any currency, it isn't revenue until I transfer it into my bank account. And that necessarily happens in AUD. That amount is what I take to book and therefore what the ATO sees.

If I get a wire transfer (TT) in USD, it's AUD when it hits my bank. That amount is what I take to book and therefore what the ATO sees.

Having said that, I agree with the comments suggesting that the OP keep it as a 'hobby' until it's actually making money. And yes, the ATO will give good, free advice. As will their website. As will the business portal of whichever state in which he resides.

Oh, and spring a couple of hundred bucks to buy MYOB.

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Regional Warrior 14 years ago

Hey Guys

Does the Bass come into play here because that will be a bugger, as I have a launch coming soon and I was talking to the missus the other night about this, just dont feel like driving the 2.5 hour drive to bisvegas to see an accountant as I am not sure the one in town (Warwick) may know anything about the IM world...

Jase
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Daniel Scott

14 years ago

Jason,

Here's my understanding (and I'm not an accountant)...

You declare your profits at the end of the year and pay tax. That's it.

No GST, and no BAS - unless you are paid by Aussie businesses in AUD.

I'm not, so from what I've been told, I don't have to worry.

-Dan

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AndrewCavanagh

14 years ago

Originally Posted by Daniel Scott

Actually it's a little more complicated than that.

You have to pay GST on sales to Australians if your annual turnover is over a certain amount.

(In other words if you make a direct sale to an Australian even if the sale is made in US dollars you still have to pay GST on that sale).

The amount is substantial so you'd almost certainly be making a full time income from your online business before you'd have to worry about it.

Kindest regards,
Andrew Cavanagh

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JimmyRose 14 years ago

Originally Posted by AndrewCavanagh

The amount is substantial so you'd almost certainly be making a full time income from your online business before you'd have to worry about it.

$75k, i believe
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Bicycle Cat 14 years ago

I don't think an ABN is neccesary, just pay tax.

Unless you make a large business out of this.
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tryinhere 14 years ago

for those wondering you can call the ATO and a rep will call out at no cost to you and talk through your business and the requirements for your set up as needed.
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Safade Billy 14 years ago

I registered myself as sole trader and got an ABN.

And leave rest of stuff for the accountant to take care.
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Anna Johnson

14 years ago

By all means see an accountant and do what's best for you financially. But let me ask you a question: ultimately, do you want your Internet marketing activities to be a hobby or a full-time business?

Because if your answer is a 'full-time business' you will do yourself a big favour by getting yourself an ABN, etc and treating your Internet marketing activities as a business from the get-go.

By performing this kind of 'psychological hack' you are essentially telling yourself that this IS a business and NOT a hobby, which may just give you that extra motivation to make IM your full-time business sooner rather than later.

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JimmyRose

14 years ago

Awesome guys thanks for the advice. Where exactly would you draw the (probably fuzzy) line that defines when the business is "making money"?

Originally Posted by Anna Johnson

By performing this kind of 'psychological hack' you are essentially telling yourself that this IS a business and NOT a hobby, which may just give you that extra motivation to make IM your full-time business sooner rather than later.

The thing is, I can't make this a full time gig just yet as I run away to Canada at the end of the year to work on the ski slopes. I don't really intend to be devoting a lot of time to IM there but once I get back it will be in full swing. Ideally, when I get back I'd like to be earning a bare minimum that will just pay the bills so I don't have to go back to work - so like $50/day (No mortgage yet!).

I also think the lifestyle of not having to report to a full time job is all the mental motivation I need

It's literally the number one goal in my life.

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Toby.T 14 years ago

Yeah. Aussie here. close to 3k this year.. worthy of providing to ATO?
Still a hobby right? Or is hobby under 1k?
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AUSSIES - Do you have an ABN and other tax questions

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