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Re: ABN and less income

Newbie

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My friend has ABN (Sole trader), and he just provide homemade food from home (Take away only).

Income from this is around in the range of 10-15k a year.

 

What is the best way?

1. As he has ABN, he can't file non-lodgement invoice based on less income, he has to file Buisness tax which seem overly complex for him. Should he just cancel, the ABN, continue the work and file non-lodgment advice based on income? Or he can;t do this type of work at all without having ABN?

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Most helpful response

Devotee

Replies 3

@manndeep1 

ABN is required where you are carriying out an enterprise activity (From your explanation it appears that it is an enterprise activity)

TFN income only applies when some one is working as an employee & paid to do the work by an employer (Can be ABN Holder or ACN holder, Can't be another TFN holder)

 

In terms of declaring the income & lodging the tax return, read below.

 

When someone is working & earning from the business activity they are required to lodge a tax return (It is not a non-lodgment becuase the income is below tax free threshold or the lodgement itself is complex, if one can't do it themselves, they need to pay an accountant to do it in their behalf)

 

The person needs to connect their ABN via their MY Gov account & lodge the return every year they carry out the business activity.

Ideally the income needs to be declared as a lumpsum Non primary production/other income in a business income section

Also can add the expenses relating the income.

Just becuase it is complext doens't exempt you from the Tax Declaration Obligation!

4 REPLIES 4

Most helpful response

Devotee

Replies 3

@manndeep1 

ABN is required where you are carriying out an enterprise activity (From your explanation it appears that it is an enterprise activity)

TFN income only applies when some one is working as an employee & paid to do the work by an employer (Can be ABN Holder or ACN holder, Can't be another TFN holder)

 

In terms of declaring the income & lodging the tax return, read below.

 

When someone is working & earning from the business activity they are required to lodge a tax return (It is not a non-lodgment becuase the income is below tax free threshold or the lodgement itself is complex, if one can't do it themselves, they need to pay an accountant to do it in their behalf)

 

The person needs to connect their ABN via their MY Gov account & lodge the return every year they carry out the business activity.

Ideally the income needs to be declared as a lumpsum Non primary production/other income in a business income section

Also can add the expenses relating the income.

Just becuase it is complext doens't exempt you from the Tax Declaration Obligation!

Newbie

Replies 2

Thanks for your response.

So basically I got two things from the response:
1. If he has any income he needs to lodge tax even though income is less than tax free threshold.
2. If he has income from activity he is doing now, he must use ABN to lodge .

ATO Community Support

Replies 0

Hi @manndeep1,

 

Thanks for that helpful info @Logical_smsf!

 

To answer your most recent questions:

 

1. Generally, having business income requires you to lodge a tax return. Your friend earning income under a sole trader ABN would report this on their personal income tax return. As mentioned above, the tax free threshold does not exempt your friend from lodging due to them having business income. We have a helpful tool available on our website to work out if you need to lodge a tax return. The tool isn't updated to the current financial year, but should be from July. They will most likely need to lodge due to the business income, however this will help them confirm that.

 

2. If your friend has a sole trader ABN they include the income in their personal tax return. They aren't lodging under the ABN, but rather including the business income they earn under the ABN.

 

I'll provide some links below that may be beneficial for your friend. As mentioned above, if they are confused about lodging their tax return they have the option of using a tax agent.

 

Links:

 - How to lodge a tax return

 - Do I need to lodge a tax return?

 

Hope this helps, let us know if you have any further questions.

Devotee

Replies 0

@manndeep1 

SPOT ON!