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Question regarding retail job, self-employed and oversea client tax return

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Newbie

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Hi everyone,

I hope I've chosen the right board to post in, I moved here last year with my partner and have a few questions regarding my first tax return. I have been working at a standard retail job since August in which I have earned around $23,000, and have had $2,500 tax witheld ($20,500 net income after tax). I also do a bit of graphic design on the side as a sole trader, in which I have earned around $4,500. All of my income from graphic design has been from overseas clients in the UK, paying in £GBP and then being converted and transfered to my australian bank account. My first question would be whether this would cause any problems or irregularities having been paid in GBP when entering into my tax assessment. Secondly, I made a fair number of purchases for my business as I was setting it up over here ($3500 in computer components, $700 monitor, $600 graphics tablet, $70 a month in software) and wondered whether I could use these to offset my total income for both jobs for the year, despite exceeding the amount I earned in the job for which I purchased them? Thirdly, the software that I pay monthly for has also been charged in GBP each month as the subsciption was tied into a year before I can change it over to AUD, will this cause any problems? 
Any help would be really appreciated thank you Smiley Happy

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Best answer

Taxicorn

Replies 0

First of all, you need to determine if you are an Australian Resident for tax purposes and from when.

 

https://www.ato.gov.au/individuals/international-tax-for-individuals/work-out-your-tax-residency/

 

If you are considered to be an Australian resident for tax purposes then all of your income from all sources and countries will be declared and taxed in Australia. Any income earned prior will not.

All income should be converted into $AUD when entering them into your tax return, either by using the already converted currency or if not converted then by approximating the conversion rate or using financial rates found here 

https://www.ato.gov.au/Rates/Foreign-exchange-rates/

 

All costs associated with your work as a sole trader can be claimed against your sole trader income only as you are unlikely to pass one of the four tests that permit you to offset it against your normal income, found here

https://www.ato.gov.au/business/non-commercial-losses/four-tests/

 

One that you may eventually pass is the assessable income test of $20,000 for the sole trader work.

 

After you have input all of your deductions against your Sole trader income you will probably end up with a business loss.

This will be carried forward for you to use in future years.

 

So if you have a Business loss this year (2019) of $2,000, then your next tax return (2020) will include as a 'deduction' the $2,000 carry forward loss.

If you can not use it next year it just accumulates until you can use it.

 

Don't forget that there are probably a lot more deductions that you haven't thought of yet so it may pay to see a Tax Agent/Consultant the first year so you understand everything better, the cost of which will be a tax deduction in 2020.

 

Deductions like Occupancy Expenses (Rates, Insurance, Rent etc)  by the floor area of Your Office v Total House...

There are many more but they really depend on exactly how you manage your Business.

 

 

 

 

 

1 REPLY 1
Highlighted

Best answer

Taxicorn

Replies 0

First of all, you need to determine if you are an Australian Resident for tax purposes and from when.

 

https://www.ato.gov.au/individuals/international-tax-for-individuals/work-out-your-tax-residency/

 

If you are considered to be an Australian resident for tax purposes then all of your income from all sources and countries will be declared and taxed in Australia. Any income earned prior will not.

All income should be converted into $AUD when entering them into your tax return, either by using the already converted currency or if not converted then by approximating the conversion rate or using financial rates found here 

https://www.ato.gov.au/Rates/Foreign-exchange-rates/

 

All costs associated with your work as a sole trader can be claimed against your sole trader income only as you are unlikely to pass one of the four tests that permit you to offset it against your normal income, found here

https://www.ato.gov.au/business/non-commercial-losses/four-tests/

 

One that you may eventually pass is the assessable income test of $20,000 for the sole trader work.

 

After you have input all of your deductions against your Sole trader income you will probably end up with a business loss.

This will be carried forward for you to use in future years.

 

So if you have a Business loss this year (2019) of $2,000, then your next tax return (2020) will include as a 'deduction' the $2,000 carry forward loss.

If you can not use it next year it just accumulates until you can use it.

 

Don't forget that there are probably a lot more deductions that you haven't thought of yet so it may pay to see a Tax Agent/Consultant the first year so you understand everything better, the cost of which will be a tax deduction in 2020.

 

Deductions like Occupancy Expenses (Rates, Insurance, Rent etc)  by the floor area of Your Office v Total House...

There are many more but they really depend on exactly how you manage your Business.