Working with an ABN can sometimes be daunting for individuals who think they are not equipped to run as a ‘business’. The reality is if you have an ABN while you may be a business, you can also operate as a ‘contractor’. This means you work for yourself and earn your own income but don’t necessarily own your own business.

Working as a contractor allows for more freedom in your schedule allowing you to work as little or as many hours as you choose. This kind of employment is on the rise with the emergence of the ‘gig economy’, more and more young professionals, students, and part-time parents are choosing this lifestyle because of the freedom it allows. However, there are regulations you must follow to ensure compliance with the ATO.

1. Do I have to declare my income?

Yes. If you’re earning an income from providing services through tappON, then you will need to declare that as an assessable income. We recommend keeping an accurate record of all jobs you have completed to avoid questions from the ATO. Remember to record the total amount (fee advertised) that users paid – not the amount you received after the Service Fee is deducted.

2. Will I have to pay tax on my income earned? How much should I keep aside for tax time?

Yes, if you’re earning income from providing services through tappON you will need to pay tax on that income.

The amount of tax you pay at the end of the financial year is based on your income. As incomes vary and so does tax it will depend on your income earned. To work out how much you should be keeping aside the ATO offers a very simple tax calculator to get a rough estimate. Alternately, you can get advice from a tax accountant for a small cost.

3. Do I need to register for GST?

GST stands for goods & services tax and is a ‘is a broad-based tax of 10% on most goods, services and other items sold or consumed in Australia.’

GST only applies if you earn more than $75,000 a year. If you believe this might be you we highly recommend talking to an account as there are extra forms you have to lodge with the ATO.

4. Can I claim tax deductions?

Yes! The benefit of being a sole trader is you are eligible to claim deductions on your tax for any expenses you incur.

There are different types of expenses you can incur including:

• • Fees paid ie the service fee for tappON

• • Travel costs to and from a job on tappON and between jobs including:
    – Parking
    – Fuel
    – Public Transport

• • A portion of your mobile phone bill

• • Clothing required for work ie shoes

• • Any insurance related to the jobs you complete

• • Accounts fee

• Fees related to a business bank account

5.What about my superannuation?

For superannuation, an employer is legally required to pay 9.5% however sole traders are not required to make contributions. We here at tappON strongly suggest you do though as it allows your super to grow to prepare you for retirement. If making personal super contributions you can claim a tax deduction for this in your personal tax return, up to the concessional contributions cap of $25,000 less SGC amounts.

Note that if you intend on making personal super contributions you need to notify your fund in writing of the amount you intend to claim as a deduction, and your fund must acknowledge your notice of intent to claim a deduction in writing before you lodge your tax return for the relevant year.

To do this you need to complete a Notice of intent to claim a deduction form which you can download from your fund or the ATO website.

6.What about my leave entitlements?

Working with an ABN means you will have to allocate a portion of your income aside if you wish to have ‘leave’ available. We advise working out what amount best suits you and your upcoming holidays.

Working on a contractual basis can be more lucrative than a part-time job and offers more flexibility and hours – whilst still working within your own schedule.  

Whilst there is a lot of financial aspects to keep on mind don’t let it overwhelm you. Working for yourself is a rewarding experience that allows you the freedom to move throughout your life and achieve a work/life balance. It also allows you to progress in your career at a speed you choose.

Sign up for tappON today and start your journey to becoming your own boss