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If I have a full-time job and a business on the side, will the full-time work and the business both contribute to the total taxable income or will only the business contribute.

i.e. If business is earning 20k a year and part time work is earning 50k would the taxable income be 70k for my business or simply 20k?

This is in Australia by the way

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  • Is the business set up as a separate legal entity (LLC or such)? Or are you just acting as a sole trader?
    – Peter K.
    Sep 18, 2015 at 13:26
  • Just as a sole trader
    – Oliver K
    Sep 18, 2015 at 13:29
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    It is a good idea to mention the country when asking tax questions. Sep 18, 2015 at 14:31
  • @mhoran_psprep Just added that i'm located in Australia
    – Oliver K
    Sep 19, 2015 at 0:47

3 Answers 3

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In Australia, any income you earn is taxable despite where it came from. Using your example your taxable income is $70,000. Keep in mind that with a business even as a sole trader any business expenses that contribute to the earning of your business income is deductible, reducing the final amount of tax you'll have to pay.

The ATO website has lots of good information and examples to look at including tax rates.

If your total income is pushing into a higher tax bracket over 30c tax per $1 earned, it may be worth looking at shifting your business to operate under a company structure that just has a fixed tax rate around 30c per $1.

That said, for me, I don't want the paperwork overhead of a company yet so I'm running my side business as a sole trader too. I'd rather do that and keep it easy for now while my business gets profitable that waste time on admin structures for tax reasons even if in the shortterm it may mean slightly higher tax. In the end, you only pay tax on profit (income minus expenses) as opposed to raw/gross income.

For more info there are good books in the bookshops or local library (to read free) on starting a business on the side while still working. They discuss these issues too.

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I'm not sure I am fully understanding the nuance of your question, but based on your answer in the comments you and your business are not separate legal entities. So your income is the full $70K, there is no distinct business to have income.

If you clarify your question to include why you want to know this I might be able to give a more meaningful answer for your situation.

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    I would add that the total income is yours in this scenario, not the business's. That's in this answer, but it's mis-stated in the question, so it seems worth emphasizing.
    – user32479
    Sep 18, 2015 at 19:49
  • Right, thanks guys! The reasoning for this question is the extremely large tax i'd have to pay as a soletrader working on the side. I'm pretty new to all of this so still getting my head around it
    – Oliver K
    Sep 19, 2015 at 0:49
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Possible alternative: In my case, the part-time locksmithing is a small enough portion of my I come that I just submit it as hobby income, rather than trying to track it as a separate entity.

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    I doubt $20K would be considered hobby income. Sep 18, 2015 at 20:28
  • I know craftsmen who can bring in that much. Of course that's gross sales, not profit.
    – keshlam
    Sep 18, 2015 at 21:21

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