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I work as a private tutor in addition to my full-time job in the public sector. I know that I will need to include any additional income on my tax return since I will need to pay an extra tax. Do I need to get an ABN for this? I have done some research online but haven't found a clear answer so far. (If it is relevant, I estimate that I will earn about an extra $7000 per year from this additional work.)

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Yes, if you are doing any sort of business, and as long as it is not a hobby, you will have to apply for an ABN. For it to be a hobby it would need to be more as an ad-hoc thing where any money you make is mainly to pay for the expenses incurred in your hobby. Tutoring does not seem to be a hobby, so you would need to apply for an ABN.

The ABN allows you to enter your business income and expenses at Item 15 of the Tax Return. Also, after your first year of earning business income, if you end up paying additional tax due to the business income, in the following year the ATO may determine that you have to pay PAYG Installments each quarter. This means that you will be paying regular tax on your business income (similar to your employment income) so you won't have one big lump sum of tax to pay at the end of the year when you lodge your Tax Return.

If you will only be earning around $7000 per year from your business income you do not have to register for GST. You only have to register for GST if your business income goes abouve $75k (except for some types of businesses like Taxis or Uber Drivers). This means that you cannot charge your clients any GST on your fees.

  • AFAIK It's very rare for the ATO to force sole traders to pay PAYG, especially for incomes as low as 7k/yr – Fred Stark Apr 24 at 7:07
  • @FredStark - the $7k is above whatever other income is earned, and if this $7k makes the tax payable by the taxpayer more than what they usually pay in tax, then yes they will be asked to pay extra PAYG each quarter. – Victor Apr 24 at 10:05
  • I've been a sole trader for 10+ years with income ranging from 2k on top of a full time salary to 20k+ over my full time salary, to working exclusively as a contractor and earning everything on an ABN and never had this mentioned to me. Yes extra tax is payable, but that is dealt with at tax time – Fred Stark Apr 25 at 2:21
  • @FredStark - do you do your own taxes or go to an accountant? Do you check your MyGov messages? If you are not being asked to pay any PAYG it could be because you are already paying enough tax through your wages. Do you have to pay a big amount when you lodge your return or do you still get a little refund? – Victor Apr 25 at 8:57
  • I do my own taxes, always read myGov messages and usually get a tax return (mostly because of donations, but also some deductible expenses). There were a couple of years that I had a tax bill at the end (when most of my income was through the ABN) – Fred Stark Apr 26 at 2:12

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