Hi Team, I currently work as an employee in a full time job. I also do menulog on the side as a sole trader(we have our own ABN numbers). These payments from menulog come in without being taxed. I want to know what rate to apply tax to these amounts, as technically it is not a second job?? I also want to know how I can pay this tax to the ATO as I don't want to owe any money next year. I won't earn any more than $20,000 annually with menulog.
Thanks
Hi @Andrea5,
As a sole trader you're taxed on your total taxable income. This means the appropriate tax rate to apply depends on what you estimate your taxable income will be at the end of the year. You can view the current income tax rates on our website to understand what rate applies to certain income brackets. From there you can look at withholding a rate that would cover the tax payable for your income.
As for avoiding a tax debt at the end of the year, we have our Pay As You Go Instalments (PAYGI) system to help with this. This system allows you to make regular tax payments throughout the year based on your business income (Menulog for your case). The link provided runs through everything you need to know, but feel free to let us know if you've got any questions.
Hi @Andrea5,
As a sole trader you're taxed on your total taxable income. This means the appropriate tax rate to apply depends on what you estimate your taxable income will be at the end of the year. You can view the current income tax rates on our website to understand what rate applies to certain income brackets. From there you can look at withholding a rate that would cover the tax payable for your income.
As for avoiding a tax debt at the end of the year, we have our Pay As You Go Instalments (PAYGI) system to help with this. This system allows you to make regular tax payments throughout the year based on your business income (Menulog for your case). The link provided runs through everything you need to know, but feel free to let us know if you've got any questions.
Thanks Ethan,
Is my salary pay and my sole trader pay classed as two seperate things?
I already claim the no tax threshold through my employer. Can I claim it again as a sole trader- I don't anticipate making anymore than $18,000 ( which is around the no tax threshold). Or do I need to add the two together which would put me in the 45,[TFN removed by moderator] bracket. If I have to add them together it won't give me an accurate tax rate to pay as I'm already paying the appropriate tax on my salary and would be looking to find just the rate for the $18,000. thanks -I just need to make sure I'm doing the right thing here, so apologies for all the questions.
Hi @Andrea5,
No worries at all for the questions - that's what we're here for!
Your salary pay and sole trader income technically are two different sources. Due to this they're reported in two separate sections of your tax return. For calculating your tax payable as a sole trader it's based on your overall income. This means both sources are included to find your overall tax rate.
The tax-free threshold can only be claimed with an employer. You won't be able to claim it for your ABN income.
You'll need to add your ABN income to your other sources of income to find your total. The tax free threshold will still then apply to the first $18,200 of your income, however your tax payable will be calculated on what bracket your total income falls under. Your tax rate takes into account the tax-free threshold being applied along with the tax paid for lower tax brackets you may be above.
You may wish to seek out help from a tax agent to work out a setup that works best for your situation regarding withholding.
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