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When am I required to pay tax on sole trader income if I invest in shares

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I am current working at a full time position earning a 50-90k
If I work as a contractor and earn 10k as a sole trader I am only required to pay tax on that money at EFY.
If I invest the 10k in an ETF or Managed fund which reinvests the dividends, am I required to pay tax on the 10k still? Or is it counted as an expense to my business?
Or Is it when I withdraw the funds from my shares that I will pay tax in the financial year that I withdraw?

Also, does it make my total taxable income appear less? Or is my total taxable income independent of whether I buy shares with it? does the government see me as earning 50k-90k + 10k?

I would really appreciate some clarity on this. Thanks.
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Taxicorn

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@pav 

 

If I work as a contractor and earn 10k as a sole trader I am only required to pay tax on that money at EFY.

Only the first year, subsequent years you will need to pay it every 3 months.

 

If I invest the 10k in an ETF or Managed fund which reinvests the dividends, am I required to pay tax on the 10k still? Or is it counted as an expense to my business?

 

You pay tax on the dividends received, they just don't need to be paid to you as you received them and reinvested them.

How would investing been ever seen as a "Business Expense"?

 

Also, does it make my total taxable income appear less? Or is my total taxable income independent of whether I buy shares with it? does the government see me as earning 50k-90k + 10k?

 

The amount that you have invested does not form part of your "taxable" income but the 50-90K + 10K + dividends will be.

 

 

1 REPLY 1

Most helpful response

Taxicorn

Replies 0

@pav 

 

If I work as a contractor and earn 10k as a sole trader I am only required to pay tax on that money at EFY.

Only the first year, subsequent years you will need to pay it every 3 months.

 

If I invest the 10k in an ETF or Managed fund which reinvests the dividends, am I required to pay tax on the 10k still? Or is it counted as an expense to my business?

 

You pay tax on the dividends received, they just don't need to be paid to you as you received them and reinvested them.

How would investing been ever seen as a "Business Expense"?

 

Also, does it make my total taxable income appear less? Or is my total taxable income independent of whether I buy shares with it? does the government see me as earning 50k-90k + 10k?

 

The amount that you have invested does not form part of your "taxable" income but the 50-90K + 10K + dividends will be.