I am a support worker and have 4 direct participants. I was told to put 20% of my earnings aside to go towards tax, but wondered if I should do that for all invoices? Some can be for a few days of work during the week ($500+) and some are one offs ($150 roughly). I've been putting aside 20% for everything but wondering if I only have to do it for the larger invoices?
Hi @Lolly161986,
Putting aside a 20% is definitely a good start!
What I would recommend doing if possible is estimating your yearly income. If you can obtain a reasonable estimate, you can use our tax rates page to work out approximately how much tax you should withhold. Keep in mind that does not include any additional amounts such as Medicare levy or the Medicare levy surcharge.
You are able to put the money aside yourself if you wish, or you could look at entering into the pay as you go (PAYG) instalments system. This allows you to prepay your tax amounts to use over the year ready for your return. It requires you to have an estimate of your tax and income, however you can adjust it when needed.
Another way you could approach this is to the use the 20% withholding amount for a set period (weekly, fortnightly, monthly). Once you then reach the end of the period you could use our tax withheld calculator to provide an estimate of what you would have had withheld by an employer for the same total amount. You can then adjust your amount being put aside for the period as needed and repeat the process for the next period. This information is also available in tables too if that's easier.
Let us know if you have any questions!
Hi @Lolly161986,
Putting aside a 20% is definitely a good start!
What I would recommend doing if possible is estimating your yearly income. If you can obtain a reasonable estimate, you can use our tax rates page to work out approximately how much tax you should withhold. Keep in mind that does not include any additional amounts such as Medicare levy or the Medicare levy surcharge.
You are able to put the money aside yourself if you wish, or you could look at entering into the pay as you go (PAYG) instalments system. This allows you to prepay your tax amounts to use over the year ready for your return. It requires you to have an estimate of your tax and income, however you can adjust it when needed.
Another way you could approach this is to the use the 20% withholding amount for a set period (weekly, fortnightly, monthly). Once you then reach the end of the period you could use our tax withheld calculator to provide an estimate of what you would have had withheld by an employer for the same total amount. You can then adjust your amount being put aside for the period as needed and repeat the process for the next period. This information is also available in tables too if that's easier.
Let us know if you have any questions!
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