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Hello ATO Community, 

 

I have been earning my income via contracting myself for my labour as a photographer. I am sent to a job - representing a company, photograph the job with the companies equipment and at the end of the week, I send the company an invoice - quoting my ABN - with an agreed value (Day rate or Hour rate for my time).

 

I do with multiple companies with no single one making up 80% of my yearly income. This type of income makes up 98% of my earnings.

 

For SUPER purposes I am classed as an employee and currently have the ATO chasing these, but I'm a little confused in regards to Tax and what exactly are my obligations.

 

I had an accountant a few years ago tell me that because my "business" earns less than $75k per year I am not required to pay GST.

 

I believe I fall into the category of earning a PSI as I am not selling goods but rather labour hire. Is this correct? 

How do I pay tax on a PSI?

Do I wait until TAX returns are due and notify the ATO through there?

 

 

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ATO Certified

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Hi @RM90,

 

Welcome to our Community.

 

Based on the information you have provided sounds like you are a contractor; however you can use the employee or contractor decision tool on our website to determine if you are a contractor.

 

If more than 50% of the income you received for a contract was for your labour, then all income from that contract is classified as Personal Services Income (PSI). To assist with working out if the PSI rules apply to you refer to our website, where there is a detailed spreadsheet and additional information.

 

As @macfanboy advised the pay as you go (PAYG) instalments system allows you to make regular payments towards your future annual tax assessment. This system is used when you are receiving income that does not have tax withheld at the source. Commonly this is business or investment income. To assist with limiting your tax liability you can enter into this system at any time through the year, unless we have already entered you into the system.

 

You will find additional information about PAYG instalments on our website, including how to start paying instalments.

 

You may also like to refer to PSI – completing your tax return.

 

I hope this helps, SueO

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Devotee

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Basically, there are three types of wage earners; employees (working 100% for 1 company), sole traders (independent - choose who they work for) and PSI workers who are contracted for labour

 

With PSI workers either the PSI rules apply or do not apply depending on a series of tests

 

I believe that the rules do apply to you as you basically work for 1 company, hence why you should get Super.

 

There is no different tax for PSI, Business, individuals, sole traders it is all the same.

 

If you are not paying any tax now it will be calculated when you do your 2019 tax return and you will then pay it.

Next year you will go onto Pay As You Go, where you will pay 1/4 of the tax you paid in 2019 every 3 months.

This gets readjusted each year.

 

Yes if your turnover is below $75,000 you don't need to be registered for GST (which is more of a pain).

 

Best answer

ATO Certified

Community Support

Replies 0

Hi @RM90,

 

Welcome to our Community.

 

Based on the information you have provided sounds like you are a contractor; however you can use the employee or contractor decision tool on our website to determine if you are a contractor.

 

If more than 50% of the income you received for a contract was for your labour, then all income from that contract is classified as Personal Services Income (PSI). To assist with working out if the PSI rules apply to you refer to our website, where there is a detailed spreadsheet and additional information.

 

As @macfanboy advised the pay as you go (PAYG) instalments system allows you to make regular payments towards your future annual tax assessment. This system is used when you are receiving income that does not have tax withheld at the source. Commonly this is business or investment income. To assist with limiting your tax liability you can enter into this system at any time through the year, unless we have already entered you into the system.

 

You will find additional information about PAYG instalments on our website, including how to start paying instalments.

 

You may also like to refer to PSI – completing your tax return.

 

I hope this helps, SueO

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