So... I'm currently employed as a fulltime programmer and managed to score some work on the side (for another company) of around $2500. How would I get this money into my bank account without being dodgy? I expect I'll be paying heaps of tax. Do I need an ABN? I'm told I'll need to issue a tax invoice. Do I need an ABN to give a tax invoice?

Depends how you're employed. If it's contract work, then yeah, you need to apply for an ABN otherwise they need to withhold 48%; if you're on their payroll you can just be paid directly and they *should* subtract most taxes (you'll still need to factor it all in on your tax return).

If you're invoicing for over 50k, you need to register for and charge GST (unless the threshold has changed).

Just send the money to me and I'll take care of it from there.

Under the table ;)

Nah, you just want to register as a Sole Trader. If you make less than $80k from the business (or something like that) then you don't worry about GST. You get ABN, download some Excel Invoice template and use that. Don't add GST and I have found it helps to write a note on the invoice about why no GST is added - sole trader business, not a registered GST business, no GST on this invoice.

then you just add it to the income label on your tax return as other income.

big thanks guys

i'll try getting my abn tomorrow

how do you get abn?

holy s*** if you cannot figure that out using google you fail at life.

Or at googling, wait, no at life.

I expect I'll be paying heaps of tax

You won't pay tax on this work until you do your tax return, where it wil be added to your gross personal income. You'll probably need to eventually pay roughly about 30% tax on this amount.

Also you don't need to pay any of the income into super as its not employee wages.

If you normally get more than about 6-800 back when you lodge your tax return you should be covered by your normal PAYG withholding. That said don't be surprised to get an end year income tax bill from the tax office if you do do many more freelance gigs.

you pay the same amount of tax on it, as you do on your income

if you're in the highest tax bracket, so will this income
if you're in the lowest tax bracket and this doesn't push you into the next bracket, you pay the lowest amount

register for abn is free & easy, everyone should do it because you never know when you'll need one

teq is right - ultimately you end up paying the same amount of tax regardless of if you have an ABN or not.

Having an ABN will make it easier, and probably end up with less tax withheld. As mentioned already, if you don't have an ABN, they withhold the amount in the maximum tax bracket. This will of course balance out come tax time, so in the end you will be in the same position whichever route you go with.

I have the same sort of thing. I do little bits of work here and there and also the odd payment from Apple for iPhone apps (havent even had one yet though). Not going to get anywhere near the $75,000 GST threshold (maybe a grand and a half at most on the side by the end of tax year).

I'm not charging tax on freelance work as I know I won't be over the GST threshold. Which reminds me... I have to file my BAS statements :S.

The main problem with all this is I have no idea how it all works. I've never done any business/tax s*** before this. Merely just basic single income from work via e-tax, get paid, carry on with life. I need to hit up a tax agent when it comes around. They'll probably be able to explain my tax obligations etc.

last edited by 3dee at 11:19:07 16/Apr/09

sifnt get your abn at 16 ya nubs.

From my googling I was directed to a calculator the ATO has called 'ABN Entitlement Tool'. It works out whether an individual should get an ABN.

How do I get an ABN?

Yeah I was a sole trader and the ATO deactivated my ABN because I apparently didn't have enough reasons to use it. I needed that for a domain / contract work. Oh well f*** them, I tried to do the right thing, but they didn't want it.

how do you get abn?

takes about 5mins online.

you pay the same amount of tax on it, as you do on your income

This is true, but most people in this situation (sole trading freelance on top of full-time gig) would fall well between the 34-80k bands. This is where I pulled the 'probably 30%' figure from.

If you're programming full-time for less than 34 then you're being ripped. If you're grossing more than 80k and doing additional work as an entity then you should really see your accountant for tax advice.

last edited by Hogfather at 12:25:13 16/Apr/09

imo its in everyones best interest to see an accountant anyway, unless you're <18 and working at kfc etc

what it costs will usually be made up two fold in deductions/claims

tell em they can pay you much less but in green bad boys :P

You only have to register for GST when you hit the $75,000 point. Before that, you only need to have an ABN, and your invoices should say "No GST has been charged".

I'm using the ATO's e-record software. It's free and does the job quite nicely. Install the self paced tutorial to learn how to use it. It'll generate invoices for you which you can print or save as pdf for emailing.

Also handles your balance sheet (receipts and payments).

+1 for having an accountant if you have anything more complex than a couple of PAYG jobs. Very cheap, good experience. Need to get used to using them as your life becomes more complex in the finance dept.