I am a 14 year old about to start a dropshipping e-commerce business(Sole Trader). I am expecting to make more than 416$ annually. Do I need a TFN? If yes, are there any differences in paying taxes as a sole trader if I am a minor and do I need to file tax returns. Any other advice in Tax and Legal fields would also be appreciated.
Unfortunately, the reply from ATO is not correct.
Minors (ie persons not yet of adult age) only pay higher rates of tax on unearned income.
Your business income arising from your work, skill, and effort as a sole trader should be taxed at same marginal rate/s that apply to adult taxpayers.
This is probably a good example of why you should not try to fill up your tax return in any ATO online system.
You're very likely to get a better result by seeking advice from an experienced accountant.
Good luck with your new business.
Hi @premk68,
If you're going to be earning income with an ABN then yes, you'll need to apply for a TFN.
You'll need to lodge a tax return, which you can do online using myGov. As a minor, you may need to pay higher tax rates. You don't need to work this out yourself, though. When you lodge your tax return, we'll work out how much tax you're liable to pay for you, and we'll issue you an assessment showing either the amount of tax you owe, or a refund.
There's some information on starting a business as a young person that might be helpful for you while setting up. Best of luck! Feel free to let us know if you have any more questions.
Unfortunately, the reply from ATO is not correct.
Minors (ie persons not yet of adult age) only pay higher rates of tax on unearned income.
Your business income arising from your work, skill, and effort as a sole trader should be taxed at same marginal rate/s that apply to adult taxpayers.
This is probably a good example of why you should not try to fill up your tax return in any ATO online system.
You're very likely to get a better result by seeking advice from an experienced accountant.
Good luck with your new business.
@Peter_Clyne Thanks. You said I shouldn't fill up my tax return in ATO system but isn't that the only way? What ways are there to file tax returns? Also, Is it ok for me to register an ABN and start the business before I have a TFN and then when I'm about to go past the $18,200 tax-free threshold?
good pick up thanks for clarifying and providing that extra info Peter
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