australian webmasters and tax - GoFuckYourself.com

mGreg · 09-04-2003, 06:36 AM

(i'm pretty sure australian and US laws are different so this is to the aussies) How do handle tax/business structure? I was interested in forming a company to run my web operations under and a couple investments so i woulden't have to take the 48% tax rate. This week i was told by my accountant that since i was the 'item' generating the income it should be paid to me(aka personal tax rate) and that some authority could be on my back if i retain money in a company like that.(that wasn't his exact explanation but this accountant is very good)

How do you guys handle this? there MUST be a legal(i'm only interested in a legal way) way to do this, 50% tax(over 50 or 60k) seems so stupid..

any thoughts/discussions welcome

IMP^or^SNiTL.e · 09-04-2003, 06:40 AM

charge GST

or just dont declare the income

rowan · 09-04-2003, 07:26 AM

mGreg, I'd be interested to hear what you come up with. I'm still a sole trader paying normal income tax rates. My understanding of company tax is fairly limited, but my vague research didn't really suggest a great deal of benefit would be achieved by incorporating. For example, as a sole trader I can't claim my car as a business expense (since it's not actually used for business), and nothing changes with a company structure - it's still not a legal deduction since the car is for private use.

I know there are other benefits such as salary sacrificing, and splitting income with a partner, so I'd love to hear more.

invertiga · 09-04-2003, 07:33 AM

I tried to work this out with the ITP dude the other day when i did my return. Cause last financial yr wif it i earned under 50k or whatever I don't need a ABN etc, so it counts as hobby income, i showed my cheque stubs, he asked me if they were more than my expenses in a dodgy way, i said of course not, he said "well dont say a word about it".... and that was that, although this year money going to be higher so i dunno wtf to do other than grab a abn and work as a sole trader and pay the normal tax brackets.

puresexnow · 09-04-2003, 07:43 AM

http://swiss-bank-accounts.com/

rowan · 09-04-2003, 07:48 AM

invertiga - get an ABN, GST is relatively easy to calculate (once you learn how). If you're like me and all of your income is from USA sponsors, then you pay no GST (since you are not collecting any), and you get back the GST portion of deductable costs like internet access. Just remember that you must only claim the portion that is for business use.

If you're earning more than $1k per year from non salary sources then you're probably already paying tax installments each quarter?

mGreg · 09-04-2003, 07:54 AM

What i had origionaly intended to do was operate as a company, pay the company tax(30%) and keep most of the money inside the company, invest under the company and so on. Then when i needed money i would pay out to myself as dividents(and pay the extra tax). It would basicaly mean i could accumulate money faster. I've been informed its not possible(not legal, its possible i would raise some red flag if i did this) so i'm not sure what to do.

Paying 50% tax just doesn't seem right, it really makes it tough to keep trying to grow.

mGreg · 09-04-2003, 07:55 AM

Quote:

Originally posted by rowan
invertiga - get an ABN, GST is relatively easy to calculate (once you learn how). If you're like me and all of your income is from USA sponsors, then you pay no GST (since you are not collecting any), and you get back the GST portion of deductable costs like internet access. Just remember that you must only claim the portion that is for business use.

That is exactly what my accountant has told me to do.

BlueDesignStudios · 09-04-2003, 07:56 AM

The situation with GST may be a little more complicated than that.

When I was doing a lot of search engine traffic (ppc stuff), the tax department suggested that I would have to charge GST to consumers (how the fuck would that work, it's so fucking dumb) - they just wanted me to be a tax collector for them! Since all our clients are overseas though, we're classifed as exporters. We don't do the ppc stuff anymore either.

But this is a complex issue, there are advantages to running a company in AU, but there are other costs, especially administration costs I've found to be quite high, there is so much dumb ass paperwork with this tax system..

Don't get me started on this...

mGreg · 09-04-2003, 08:17 AM

My accountant told me that it was a bad idea to run a company if i was the only one working under it and it was pretty obvious it was me who was generating the revenue. I don't know what to do, paying the personal tax rate seems so unreasonable, any comments appreciated..

(i'm going to sleep but i'll bump this again in the morning!)

PornBroker · 09-04-2003, 08:36 AM

Quote:

Originally posted by mGreg
My accountant told me that it was a bad idea to run a company if i was the only one working under it and it was pretty obvious it was me who was generating the revenue.

I'd get a new accountant, unless he has come to that conclusion based on other facts that we don't know about.

I suppose a lot depends on the amount you expect to earn, but you can either have a family or unit trust sit under your coy and split the distribution of profit keeping one under $A60k.

or as you say keep the profits in the coy and pay only coy tax.

my advice would be to get another accountants opinion.

invertiga · 09-04-2003, 09:05 AM

rowan - the only tax i currently pay is for my casual hours in a brissy restaurant, and thats pay as you go tax. i've been looking into getting an ABN and will so next week, need to finish my 5000 word paper for tomorow on technology applications in restaurants first

mGreg · 09-04-2003, 08:44 PM

This accountant is meant to be very good but i agree another opinion would be good. So what do all you other aussie webmasters do about this?

i'm keen to hear more

09-04-2003, 06:36 AM	#1
mGreg Confirmed User Join Date: Mar 2002 Posts: 602	australian webmasters and tax (i'm pretty sure australian and US laws are different so this is to the aussies) How do handle tax/business structure? I was interested in forming a company to run my web operations under and a couple investments so i woulden't have to take the 48% tax rate. This week i was told by my accountant that since i was the 'item' generating the income it should be paid to me(aka personal tax rate) and that some authority could be on my back if i retain money in a company like that.(that wasn't his exact explanation but this accountant is very good) How do you guys handle this? there MUST be a legal(i'm only interested in a legal way) way to do this, 50% tax(over 50 or 60k) seems so stupid.. any thoughts/discussions welcome

09-04-2003, 07:56 AM	#9
BlueDesignStudios Confirmed User Industry Role: Join Date: Feb 2003 Location: Australia Posts: 9,492	The situation with GST may be a little more complicated than that. When I was doing a lot of search engine traffic (ppc stuff), the tax department suggested that I would have to charge GST to consumers (how the fuck would that work, it's so fucking dumb) - they just wanted me to be a tax collector for them! Since all our clients are overseas though, we're classifed as exporters. We don't do the ppc stuff anymore either. But this is a complex issue, there are advantages to running a company in AU, but there are other costs, especially administration costs I've found to be quite high, there is so much dumb ass paperwork with this tax system.. Don't get me started on this... __________________ Blue Design Studios - Adult Design Specialists! Email me for a free quote: [email protected]

09-04-2003, 06:40 AM	#2
IMP^or^SNiTL.e A/S/L .. I don't names. Industry Role: Join Date: Aug 2003 Posts: 1,177	charge GST or just dont declare the income

09-04-2003, 07:26 AM	#3
rowan Too lazy to set a custom title Join Date: Mar 2002 Location: Australia Posts: 17,393	mGreg, I'd be interested to hear what you come up with. I'm still a sole trader paying normal income tax rates. My understanding of company tax is fairly limited, but my vague research didn't really suggest a great deal of benefit would be achieved by incorporating. For example, as a sole trader I can't claim my car as a business expense (since it's not actually used for business), and nothing changes with a company structure - it's still not a legal deduction since the car is for private use. I know there are other benefits such as salary sacrificing, and splitting income with a partner, so I'd love to hear more.

09-04-2003, 07:33 AM	#4
invertiga Confirmed User Join Date: Jun 2003 Location: BNEQLDAUS Posts: 477	I tried to work this out with the ITP dude the other day when i did my return. Cause last financial yr wif it i earned under 50k or whatever I don't need a ABN etc, so it counts as hobby income, i showed my cheque stubs, he asked me if they were more than my expenses in a dodgy way, i said of course not, he said "well dont say a word about it".... and that was that, although this year money going to be higher so i dunno wtf to do other than grab a abn and work as a sole trader and pay the normal tax brackets.

09-04-2003, 07:43 AM	#5
puresexnow Confirmed User Join Date: May 2003 Posts: 300	http://swiss-bank-accounts.com/

09-04-2003, 07:48 AM	#6
rowan Too lazy to set a custom title Join Date: Mar 2002 Location: Australia Posts: 17,393	invertiga - get an ABN, GST is relatively easy to calculate (once you learn how). If you're like me and all of your income is from USA sponsors, then you pay no GST (since you are not collecting any), and you get back the GST portion of deductable costs like internet access. Just remember that you must only claim the portion that is for business use. If you're earning more than $1k per year from non salary sources then you're probably already paying tax installments each quarter?

09-04-2003, 07:54 AM	#7
mGreg Confirmed User Join Date: Mar 2002 Posts: 602	What i had origionaly intended to do was operate as a company, pay the company tax(30%) and keep most of the money inside the company, invest under the company and so on. Then when i needed money i would pay out to myself as dividents(and pay the extra tax). It would basicaly mean i could accumulate money faster. I've been informed its not possible(not legal, its possible i would raise some red flag if i did this) so i'm not sure what to do. Paying 50% tax just doesn't seem right, it really makes it tough to keep trying to grow.

09-04-2003, 08:17 AM	#10
mGreg Confirmed User Join Date: Mar 2002 Posts: 602	My accountant told me that it was a bad idea to run a company if i was the only one working under it and it was pretty obvious it was me who was generating the revenue. I don't know what to do, paying the personal tax rate seems so unreasonable, any comments appreciated.. (i'm going to sleep but i'll bump this again in the morning!)

09-04-2003, 09:05 AM	#12
invertiga Confirmed User Join Date: Jun 2003 Location: BNEQLDAUS Posts: 477	rowan - the only tax i currently pay is for my casual hours in a brissy restaurant, and thats pay as you go tax. i've been looking into getting an ABN and will so next week, need to finish my 5000 word paper for tomorow on technology applications in restaurants first

09-04-2003, 08:44 PM	#13
mGreg Confirmed User Join Date: Mar 2002 Posts: 602	This accountant is meant to be very good but i agree another opinion would be good. So what do all you other aussie webmasters do about this? i'm keen to hear more