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Re: Subcontractor tax

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Newbie

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Hello,

 

I've just commenced work as a sub-contractor and I'm not sure how to manage my tax. It's only a small role and I will probably earn approximately $150 a week. 

 

I'm also employed full-time (earning approx $80K before tax) on a normal salary so this will be in addition to that.

 

How do I manage my tax in this situation? Do I just include the income as part of the yearly tax return?

 

Thanks.

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Best answer

Champion

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Hi @supersoniceagle 

 

I'm going to assume you're using an ABN linked to your personal name, hence operate as a sole-trader.

 

In that case you include the total income and expenses as part of your personal tax return.

 

So lets take your example:

 

Income

Job: $80,000

ABN: $8,000

Gross Income: $88,000

 

Job Deductions: $500

Business Expenses: $1000

 

Taxable income $86,500.

 

So what you may want to do is; get an estimate of the total tax you pay currently, then compare that to your income plus the total estimated "profit" of being a sub-contractor and get an estimate of the total tax. Then find the difference.

 

Alternatively you could look at the additional as being taxed within the tax bracket at which your gross income is in, which is around 32.5% for the first $10k that you make as a subcontractor.

1 REPLY 1
Highlighted

Best answer

Champion

Replies 0

Hi @supersoniceagle 

 

I'm going to assume you're using an ABN linked to your personal name, hence operate as a sole-trader.

 

In that case you include the total income and expenses as part of your personal tax return.

 

So lets take your example:

 

Income

Job: $80,000

ABN: $8,000

Gross Income: $88,000

 

Job Deductions: $500

Business Expenses: $1000

 

Taxable income $86,500.

 

So what you may want to do is; get an estimate of the total tax you pay currently, then compare that to your income plus the total estimated "profit" of being a sub-contractor and get an estimate of the total tax. Then find the difference.

 

Alternatively you could look at the additional as being taxed within the tax bracket at which your gross income is in, which is around 32.5% for the first $10k that you make as a subcontractor.