Airtasker is not qualified to provide tax advice. Information given in this article is general in nature and should not be considered tax advice. Your specific circumstances may have different tax outcomes so we recommend you seek advice from a qualified tax practitioner.
During the past year, as borders shut and we embraced spending more time at home, many Aussies also found their working situation changed. Whether it was working from home, reduced hours or even losing jobs, there was no doubt a huge shift in employment for many. With that, the flexible labour economy became a valuable source of income. It provides a great opportunity to monetise your skills whilst giving you the flexibility to work as much or as little as you want.
But as we head into tax time, it’s important to account for any income earned through the flexible labour economy and ensure that any associated taxes and deductions can be properly calculated.
Filling in tax returns may not be everyone’s idea of fun, so it’s a good idea to look for a registered tax accountant who can help and provide you with advice on your circumstances. We spoke to a tax specialist at MGI Parkinson and asked them for their top tips for Taskers this tax time.
Disclosing your ‘side hustle’
- All activities that earn an income should be declared in your tax return, whether you have a ‘side hustle’ on Airtasker, do freelance work on the side of your primary job, or act as an independent contractor.
- The ATO’s data matching analysis and forensic capabilities are very sophisticated. This means that the ATO receives information from everywhere – flexible labour platforms like Airtasker, and even gig economy platforms like Uber and Menulog, and matches the information to your income tax return.
Phone, Internet & Laptop Deductions
- If you use your phone, internet, or laptop directly to earn income, for example quoting for tasks, liaising with posters, or completing tasks, you may be eligible to claim a percentage of these items to the extent they are used for business purposes.
- You can check your ‘screen time’ (and don’t forget to take a screenshot), which will give you a good indicator of the extent to which you use your phone and internet for business purposes, i.e. Airtasker, business emails, completing tasks.
100% deduction for assets
- As part of the 2020–21 Budget, the government announced it would support businesses and encourage new investment through a temporary full expensing incentive.
- You may be eligible to claim a 100% tax deduction for any new assets you have purchased in the 2021 financial year used to earning income from the flex economy.
- Tools, equipment, laptops, mobile phones, office furniture and motor vehicles may all be eligible for a 100% deduction, which you otherwise would have had to claim over several financial years.
Home office expenses
- If you complete tasks or complete the admin for your side hustle from your home office (quoting tasks, bookkeeping, record keeping), you may be able to claim a deduction for home office expenses.
- The ATO allows the at-home office ‘fixed rate method’ of 52 cents per hour, a ‘shortcut method’ of 80 cents per hour, or an ‘actual cost method’ based on expenses actually incurred.
Keep your receipts
- If you claim a deduction, you must have records to show how you work out your claims.
- My favourite app for record-keeping is ‘Dext’ where it is as simple as taking a photo of your receipt on your smartphone, so when it comes to tax time, you don’t have to go searching for receipts. MyDeductions is also an app provided by the ATO, a record-keeping tool that makes it easier for you to keep track of your records digitally.
Set some money aside to cover your tax
- Since payments received through Airtasker are to be included in your tax return, consider setting aside a portion of the amounts received to cover your taxes. How much you should put aside will depend upon your marginal tax rate. If you keep some money aside, you won’t be in for too much of a shock when it’s time to pay your taxes!