Australian Tax and Making Money Online

lyco84

lyco84

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Hey guys,

I have been making solid income from the internet for a while now. I live in Australia and I get really lazy when it comes to tax time and I definitely admit I'm no expert when it comes to the dreaded "T" word.

Most of my income comes in the form of wire transfers and checks directly from US to my bank account (through intermediary banks if need be) - from USD to AUD. My question is, does the Australian Government have access to the funds that are coming into my bank account, in particular foreign funds. If you're a fellow Aussies, what do you do when it comes to tax time?

I spoke to my dad who used to run a restaurant and he advised that the Aus Government can indeed look into your bank account, but I also heard other BHW members saying the contrary. So what's the truth?

Also, any fellow Aussies can please add to this, would be much appreciated.

Cheers
 
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Well I am not an Aussie but I would be hugely surprised if the Govt could not access your bank records. My rule of thumb is if there is a paper (or electronic) trail that leads to me in any way I claim it as income. Anything else is just not worth taking a chance on. Seriously it is in no way shape or form worth going to prison for a few thousand dollars. This is more true than ever as Govts are hurting for money they are getting more aggressive about getting every dollar they think they have coming to them.

The best way to save on your tax bill is to learn as much as possible about the deductions you can take a good tax accountant is always a good investment. Here at least they are not really all that expensive and I have found that I always end up saving enough to more than pay for the expense.
 
yes they can see what's in your bank account if they want to. the ATO can do what they want. or so i've heard.

just register an ABN as a sole trader if you need to, and do things properly. honestly, it's not worth the trouble you can into.

that's what i'm doing. i want everything done by the book.
 
I'm from NZ not Oz but if you're getting wires into your bank account and not paying tax then you are playing with fire. Either get setup properly with an accountant and proper record keeping and start paying tax ASAP or work out a way that you can get your funds in a different name, withdraw them from an ATM without them going through your bank account etc.

You might get away with it for a while, but if the tax dept gets suspicious then yes, they can look in anything and everything you might have; your bank also has auditing and reporting requirements for suspicious financial transactions.

Tax evasion is serious business and can get you jail time or _serious_ financial penalties.
 
you need to be careful sending money to australia and not declaring it especially from overseas.

what happened to me was a letter in the mail asking me what these 15 transactions were etc etc from the tax department - because the money was coming in from overseas.

you better keep a record of all expenses and all income and go see an accountant asap.
 
Thanks for the advice guys.

So in Australia, I assume you guys hire an accountant near the end of financial year around June-July?

I have already done the tax for 2010-2011. The income wasn't nearly as much as this upcoming year, so I opted to do it myself. But the coming June 2012 I will seek professional advice. My other question is; do you guys see your accountant every quarter or keep all records and statements yourself and see them only once a year during tax time.
 
Personally I would see an accountant asap: a) to get a professional opinion about what you should do about your tax status, whether you should approach the IRD proactively and possibly pay back taxes etc; and b) to get sorted out with the proper system for bookkeeping and get a run down of how your expenses are going to be set up. Get piece of mind and make sure you're doing what you're supposed to be doing from here on forward (and also that you're claiming every expense you possibly can). It's more expensive to get an accountant to fix up your dodgy record keeping later than to get it correct right from the start.

Personally I get my books updated once per month. If you're paying by the hour it makes no difference when you get them done, and I like to know I'm up to date in case the powers that be come knocking.
 
Oh they can see your bank accounts. They even let you know how much interest you have earned at the end of financial year when doing your tax so you don't have to go chasing that figure from the bank. They know more about you than you do.

You see, the way the ATO works is that they let you self assess when it comes to taxation. You can get a tax refund on anything you want. But if something sticks out in their automated systems, then you get an audit. And then they ask you to prove your claims that you made. If you made a genuine mistake, then you just pay the missing tax (that's the commissioner's guarantee you see when doing your return). If it was deliberate, then you're toast.

If you pay less than 30% tax in total, just run your business as a sole trader. If you are going to earn more, set up a company ... or a trust if you want to depending on your circumstances (I think the corporate rate is coming down to 28% soon too - not exactly sure though).

At the end of the day, pay exactly what your tax liability is. Not a cent more. Not a cent less.
 
Tax time is not the best time to be trying to find a new accountant. The best time to go looking for somebody good is early during the middle of the year when they are in their slow season. You wait until tax time and all the decent accountants are going to be too busy to take on new clients.

Find one during the middle of the tax year and he/she will tell you what info you will need to give them and when you will need to give it to them. Early is better for another reason, it will give them a chance to look over your business and give you some ideas on how to make your tax bill smaller, wait until the end of the year and you throw away the biggest advantage to hiring an accountant.



lyco84 said:
Thanks for the advice guys.

So in Australia, I assume you guys hire an accountant near the end of financial year around June-July?

I have already done the tax for 2010-2011. The income wasn't nearly as much as this upcoming year, so I opted to do it myself. But the coming June 2012 I will seek professional advice. My other question is; do you guys see your accountant every quarter or keep all records and statements yourself and see them only once a year during tax time.
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If I remember correctly, you have to be earning over 6k per annum before it becomes taxable. Otherwise it's considered hobby income. You can't claim on expenses though.

If you're operating under a business ABN, you'll be paying tax, but can claim on expenses.
 
Malofie's on the right track. Internet earnings can be classed as "hobby" income. It's the same thing as you having a garage sale, or selling arts and crafts. As long as it doesn't go over a certain amount it's OK.

Now I am an Aussie, but I don't know what that amount is. The $6000 estimate earlier would be pretty close as thats the tax free threshold.

Everything that goes through my money site is declared, but thats a real business, and is a hell of a lot more than $6000 p/a. All of my IM income usually gets reinvested, but thats a hell of alot less than $6000 p/a.

I'm also a bit of a punter and earn lots more than $6000 p/a on online betting, and that's never been an issue.

(ATTN Aussies, indians, poms etc - betting on the run in test matches IS ALMOST guaranteed money - you just have to watch the whole match with a betting account ready and take all 3 options when the odds are in your favour. I banked about $5000 over the last 2 Aus v SA tests. Make your first bet with your head, just in case the odds don't ever swing, but make the next two when the odds are in your favour only. I'll write this method up for you all one day.)
 
ok guys, i have a questions that's sort of related.

i'm going to register and abn and a business name, as a sole trader for the time being. however if everything goes according to plan, which i'll know in a few months, i'm going to register a company.

now, i've read that when you start a company, you get a new abn for the company. so i'll have the company, and i'll still have a separate abn as a sole trader. is that correct? i'll be using the company for my network of sites, and the sole trader abn for my cpa stuff, as that probably won't amount to much at this point. all my time will be going into my sites. does that sound right?

i just want to know... is the business name i register now for a sole trader able to be 'moved' or something to the company when i register that? i would like the business name i register to be for the company.

does that make sense? hope you understand what i'm asking, lol...
 
volund said:
Tax time is not the best time to be trying to find a new accountant. The best time to go looking for somebody good is early during the middle of the year when they are in their slow season.
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This is the middle of the year.

partymarty4870 said:
Malofie's on the right track. Internet earnings can be classed as "hobby" income. It's the same thing as you having a garage sale, or selling arts and crafts. As long as it doesn't go over a certain amount it's OK.
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If I remember correctly, the test is whether you a reasonable expectation of making a profit. For example, if you make wooden toys as a hobby and sell a few to buy more wood, then that is a hobby. If you make wooden toys to sell for profit, then that is a business.

Don't stress about running a small business ... the administrative side is not that bad. Hell, even the internet connection I am using to type this response is partly tax deductable ....
 
I would go see an accountant asap and ask him how to prepare your records and what stuff to keep .. and also to find out the most tax effective way of spending money.

You wait till tax time it is too late for that advice.
 
I think this also depends on the country you reside, for me I am an Australian but I live in Asia but I get funds transferred to Australia bank but have a bank account in Australia with Westpac and have told them I live overseas so have a slightly different account status, forgot what it was called.'

Anyway, so when it comes tax time, I still live in Asia and they know that so I am in the clear.
 
Are there any marketing related business owners in this thread? Im looking for somebody to sponsor my visa application as im moving to australia for 2 years starting january.

I wont require an actual job from you as I can more than support myself online. But I dont want to be sat in the house on the computer while all my friends are doing roofing work in the blazing hot sun. So there is a chance I will be doing some hard labour with my friends, so I need a working visa rather than an extended holiday visa. There are 10 of us in total, 5 are already out there staying in a pimped out $1.5 million pad. From the 5 that will be heading over, 4 are fully qualified plumbers and can easily get sponsored. Whereas, im a marketing nerd, so I need to reach out on here.

Bollox the staying in England, its freezing here.
 
G-S-T said:
Are there any marketing related business owners in this thread? Im looking for somebody to sponsor my visa application as im moving to australia for 2 years starting january.

I wont require an actual job from you as I can more than support myself online. But I dont want to be sat in the house on the computer while all my friends are doing roofing work in the blazing hot sun. So there is a chance I will be doing some hard labour with my friends, so I need a working visa rather than an extended holiday visa. There are 10 of us in total, 5 are already out there staying in a pimped out $1.5 million pad. From the 5 that will be heading over, 4 are fully qualified plumbers and can easily get sponsored. Whereas, im a marketing nerd, so I need to reach out on here.

Bollox the staying in England, its freezing here.
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hopefully i'll be able to help you out dude!!!

seriously, i'd love to. keep in touch :)

edit: planning to actually register my company in january (or sooner).

what state you moving to?
 
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cornkernel said:
hopefully i'll be able to help you out dude!!!

seriously, i'd love to. keep in touch :)

edit: planning to actually register my company in january (or sooner).

what state you moving to?
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NSW, Sydney.

But I need to get my visa application in this week if I can, so I think I might be out of luck... But thanks a bunch for the offer. Hopefully somebody on here can help :)
 
G-S-T said:
NSW, Sydney.

But I need to get my visa application in this week if I can, so I think I might be out of luck... But thanks a bunch for the offer. Hopefully somebody on here can help :)
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cool cool, no problem. i'd be glad to help someone out, but yeah, i'm only just getting started, so not enough time. :)

there should be someone on here who can help you out!

have you been here before? i love sydney. my uncle lives there, i love visiting him, sydney seems so huge compared to where i live (in adelaide). it's pretty full on.

hope you enjoy it :-)
 
We should have some sort of meeting place for Aussie IM'ers. Any ideas?
 
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