She's On The Money - Is Your Side Hustle Tax Compliant?

Episode Date: June 14, 2022

Today we are talking about two little words hot on everyone’s lips over the past few years...SIDE HUSTLE! We give you some tips, tricks, and living examples to make sure you aren't crying at tax time over the extra cash you've worked so hard for!Acknowledgement of Country By Natarsha Bamblett aka Queen Acknowledgements.The advice shared on She’s on The Money is general in nature and does not consider your individual circumstances. She’s on The Money exists purely for educational purposes and should not be relied upon to make an investment or financial decision. Victoria Devine and She's On The Money are Authorised Representatives of Infocus Securities Australia Proprietary Limited ABN 47 097 797 049 AFSL - AFSL 236523.See omnystudio.com/listener for privacy information.

Hello, my name is Natasha Nabanunga-Bamblett. I'm a proud Yorta Yorta, Kernai, Wolperi and Awadjeri woman. And before we get started on She's on the Money podcast, I would like to acknowledge the traditional custodians of the land of which this podcast is recorded on Awadjeri country, acknowledging the elders, the ancestors and the next generation coming through. As this podcast is about connecting, empowering, knowledge sharing and the storytelling of you to make a difference for today and lasting impact for tomorrow. Let's get into it. She's on the money. She's on the money.

Hello and welcome to She's on the Money, a podcast for millennials who want financial freedom. My name is Georgia King and joining me as always is Victoria Devine. Hi, how are we? I'm well. Today, we are talking about a topic so many She's on the Money community members are familiar with, side hustles, but more specifically, how we can work out if our side hustle is tax compliant. Important. It makes a lot of sense that over the last couple of years in living through a pandemic,

so many of us have had to adjust the way we work. And I know personally, so many people in my life have started their own side hustles to make up for income loss. Yeah, absolutely. As it turns out, my mates and the She's On The Money community, we're not the only ones. In March this year, a new national report released by ING revealed that nearly half, 48% to be precise, of Australians surveyed either have or are planning to start a side hustle, which to me, Victoria and I, is staggering. It is because do you know what we did a couple of years ago? So back in 2019, when I first did the podcast and our community started to grow, I did a census and the census will come out again this year. I'm still just pulling all my questions together because I want

to survey you guys and like actually see the insights from our community. But I asked in that survey, how many of you had a side hustle or were planning to start? And it was 20%. Look at that growth. I wonder what would happen if you did that now in our community. I feel like so many people in our community have side hustles because we're learning so much about what that actually means. So it's now no longer like, oh my gosh, I started this jewelry creating business and I registered an ABN and I did this and I did that. It's now people going, oh, I just do online surveys as my side hustle on the weekends. And you're like, wow, like there's so many different ways. I remember a couple of months ago, we had a money diarist who just did stuff

on Airtasker. And it's just like, there's so many different ways to have a side hustle that doesn't mean you have to register an ABN and start an entire business. You can just like literally just hustle on the side for a little bit, go in some extra cashola and you're good. I love it. As long as you pay tax on it. Yes. And that's why this whole episode exists, right? So for anyone who is unfamiliar with the term V, what actually is a side hustle? It's like a side job or side revenue generating exercise. Let's call it that to bring in some extra cash. So it could be, as we heard on our money diarist, was it last week or a couple of

weeks? It was a couple of weeks ago. She just took the bins in and she got an extra two grand a year for every, what was it? Fortnight or something. Going down, picking up bins, taking them out for a body corporate, two grand a year. That's a side hustle. We know people who, you know, knit scarves and sell them on Etsy. Side hustle. Like there are so many different ways to generate income, whether you are in a more structured side hustle, I guess, framework. So something like being an Uber Eats driver or, you know, actually doing DD or something like that, all the way to actually having a full-blown side business like we've seen on Money Diaries before where people are like, oh, I have a full-time job, but also I have this entire company that I run in my spare

time. And I'm like, you have three children. How do you even have spare time? Because I have no children and still no spare time. So it blows my mind how creative our community has been in picking up side hustles so it could be you driving uber or it could be you having a full-blown company or it could be you letting out your spare room on airbnb to have guests on the weekends when you're maybe either home or not home i think it's so cool how creative our community has been with finding side hustles that before they were like oh i didn't even know that i could have a side hustle and then i realized that my spare room could literally have an airbnb guest in there and I could earn some extra cash.

How cool is that? My brother has recently learned about Airbnb and let me tell you, ladies, he is making a lot of money. Is he actually? And he's always at home and mum is helping him with the laundry, which makes me very mad. Wait, so he's, like, leasing out his place? And then staying at mum and dad's house.

What a genius. And mum does the laundry. I'm like, can you go home? Even though I don't live there, but... Does your mum do your laundry? No. Jo? She helps me with linen sometimes.

Jo? Because we don't have a dryer. Oh, you know what? I'm 27. The boys need a little bit of help, though, let's be honest. They do, they do. Anyway, point is, he makes a lot of money on Airbnb. V, COVID really ramped up flexible working arrangements beyond the traditional nine-to-five

office space situation, which we love to see. I love. We also mentioned a while back on our episode about having tough conversations with your boss, that perhaps your negotiations don't always need to be around pay, but maybe around working fewer hours, which could actually give you time to nurture that side hustle. Which I think is cool. What would you say the main reasons are that people have a side hustle? I mean, obviously making money is number one. Look, I feel like that was the number one. Like people have a side hustle because they want to

make money. And then it's also one of those things where it can be a little bit more flexible. So maybe you are a stay at home parent and you're like, I just want to do something additional to get maybe some cash in the door or just be a little bit more engaged. like I've got a girlfriend who is a stay-at-home mom at the moment and she absolutely adores it but she's gotten to a point where she's just like all right I do want my kid to go to daycare a couple of days a week just for like the social interaction but she's not willing to take on a full-time job yet or go back part-time into her role she's doing laundry like she's just become kind of like a washing lady for a couple of families around the area which I think is actually

genius so on her days off she goes and picks up the washing takes it back to her house washes it folds it, does whatever else, and then just drops it back and makes bank from it. And do you know what? I'm obviously not going to add her on the podcast, but it's a little cash job. So she's maybe not doing the tax thing she should be doing, but like, I'm not going to dob on her. And if the ATO come knocking, I'll be like, I don't know what you're talking about. I made that example up all by myself. Stunning. My grandma does the same thing. Have I told you this? She does ironing for people. That's so wholesome. Just for a little bit of cash. I feel like it's genius because like grandmas are literally the best at ironing.

Absolutely. She is talented. Like I can't iron to save my life. If there is a pair of pants that I own that have any form of pleat or crease in it, I'm like, all right, straight to the dry cleaner. And that's so expensive. Yep. I think it's genius.

Yeah. I think it's genius. Anyway, I feel like there are so many different ways you can have a side hustle and it doesn't necessarily have to always be for income. like it could just be you wanting to be engaged and do something because I'm sure grandma's like great the money's you know really helpful on the side but it's a way of especially as you're getting a bit older side hustles are a way of staying connected with your community as well and staying engaged with people who are around you and like I'm sure those families that your

grandma works for like she's kind of part of the family and like she probably doesn't want to lose that either so I think there are lots of different reasons why people have side hustles but predominantly, especially if you're listening to She's On The Money, it's probably due to cash, which is why we need to be careful about how we generate it so we don't end up with like a hefty tax bill at the end of tax time. How does it differ from a part-time job on the side fee? It's all about control. So while a side hustle is usually only done part of the time, it's not actually a consistent part-time job. Like you don't have an employment contract or a framework around it. And freelancing isn't really considered a side hustle unless it's your secondary job.

so a full-time freelancer as well I really want to clarify this like that's a legit profession that is what you do that is how you do it that is not a side hustle a side hustle to me and a side hustle to the she's on the money community it's just getting some extra cash on the side it's not going oh I have a full-time job and I have a freelance career as well like I think we need to differentiate that because I would hate people to listen to this and be like oh Victoria doesn't think it's legit yeah no I do and you are the biggest hustler of them all so some people just don't have a main job and then put it all together because they have a whole heap of side hustles as well, which is kind of cool. What are your hot tips when it comes to like

nailing a side hustle? All right. I've written down five hot tips. Are you ready for them? Do you want to just like reel them off? So start small and don't invest right away. So the value of starting small, I don't think can be overstated. People often with side hustles bite off more than they can chew and then have to wind back significantly. So make small steps today to put your side hustle together is going to put you ahead of those who are starting tomorrow but also it's going to put you in a position where you're completely in control of scaling that too often like let's use ironing as an example here you'll go oh my god I can get through like a basket every single night is that actually feasible and like is that actually going to fit

into your lifestyle or is that just something you could pick up on a Sunday so I think it's about starting small testing the waters see how you go the next is finding the right side hustle for you I think there's been a lot of pressure to quote have a side hustle, which shouldn't exist. Like if you don't want a side hustle and you actually want to enjoy your free time, do that. That is a privilege. Like the idea that people have a side hustle for one of two reasons. One, extra income and they are swapping their time for money. That is important. But I also just think if you don't want a side hustle, don't have one. People put too much pressure on themselves, but it is a really good way of getting ahead. So find the right one for you. So is it making the money that you need

it to make? Is it going to do the things that you want it to do? Is it nourishing you in the way that it needs to? I think sometimes people end up again, biting off more than they can chew and they go, I've got this great side hustle. I'm making like 50 bucks every time I sell X. But then you find out it's taking them 50 hours to make X. And then it's actually not a good trade off for the time that they're sacrificing. And they actually should have just picked up, you know, an extra guest on Airbnb and chucked them in the spare room because they would have made better bank. So I think it's about balancing what is actually feasible when it comes to having a side hustle, because regardless of how passionate you are, I think your time is

absolutely worth money. And if it's not, you know, balancing out, you're going to get burnt out really quickly. The next is understanding your reasoning for starting. So is it actually cash? Is it to pay off a debt? Is it to build an emergency fund? Is it to put yourself ahead when it comes to investing for your retirement? Is it to save for your first home deposit? Is it because you just want some more engaging work to do? Like we need to understand why to keep on track because a side hustle can quite quickly become really old consuming. So especially if you have a full-time job and then you're taking on a side hustle, remembering what you're compromising there. Like is it actually family time? Is it something that you don't want to be compromising?

Is it short term so you can get out of debt? Is it short term so you can afford a Europe trip? haha cough where I am right now bye but it's one of those things that you just really need to be quite clear on that because too many times we get so swept up and caught up in it that you're like oh my gosh I didn't even realize two years down the track that I would have done things differently so I think just being on track again prioritizing your time is 24 7 rising grind hustle culture is a joke like nobody gets up at 5 a.m and then sleeps and no one drinks coffees anymore guys it is not sexy you know what is sexy having financial and mental wellness like being consistent and looking after yourself and picking a side hustle that actually works for your mental

health and your mental state is so important like this idea of rise and grind culture and like always being on the hustle like honestly exhausting no more girl boss bullshit none just put it in the bin I just I don't like it it's so much about wellness and looking after yourself and please don't get me wrong. There is nothing sexier than a person who knows what they want and is out to get it. I'm all about that. But there's the difference between that and someone who's like, oh my God, I'm a hustler. I'm a cultured hustler. And I do this and I do that. You're not though. Just sit down, sir. So really prioritizing your time and making sure that you're sticking to those boundaries from my perspective is really important because we're all about money at

She's On The Money. We're all about generating income. We're all about everything, but over and above all of that, from my perspective, it's actually about you and your journey. Like the tagline of my business, Zella, is it's your journey. And that's the thing that we really want to focus on because it's not necessarily about the destination. From my perspective, it's about enjoying the journey as well and finding balance in your life. And I think that sometimes we forget that, especially when we get swept up in this side hustle culture of like earning money and being a girl boss. Like we're not girl bosses. I'm not a girl boss. No, we're just bosses. And we're just doing what we need to for our life and our family and what we want.

And then the last one, this is like me directly talking to freelancers here. You are going to ask for what you are worth. You are going to know your worth and you are going to add tax to that. We are not anymore going to be afraid to charge people for the services that you are providing. We are not going to undersell. We are not going to undercharge. If someone comes to your business and wants a discount, thank you for coming. No, we don't do that. Like we put ourselves first because you are the priority here. You need to be maintained and there is always going to be somebody who wants to pay for your services in full. I promise. Also remember that say if you have like a mate who has their own side hustle and you want to support them, but you also want

mates rights, don't ask for mates rights. Pay them what they were. Yeah. Thank you. So many people expect that. Oh my gosh. No. Like I just don't understand it. Like don't do that. If your friend has a small business, respect the small business. If they give you a friend and family discount, that is so kind. Don't use it. Buy. Yeah. Love it. Visa, would you say that work-life balance is a unicorn or just like does not exist for people who are... Unicorns are so pretty. Work-life balance is not pretty. If you're working full-time and you have a side hustle, how do you find time for you? Look, it's really hard and I am preaching this and you've probably picked up in my tone of voice today that I'm quite passionate about this. And the reason I'm

passionate about this is because I have been sucked into this and I do this. And I say that in the most loving of ways that I actually just want you to be in the best possible position. And as somebody who worked full time and then had She's On The Money as a side hustle, and then all of these other businesses that I keep starting because I am a psycho, it is just so important to remember why you are there and prioritize your rest and recovery. Like a couple of weeks ago, gee, I was completely out. Like I could not podcast. And it wasn't because I had COVID. It wasn't because I had the flu. All of those things were going around. I went to the doctor. I got tested. It was me being burnt out. And that is not something to write home about.

Like that is not something I'm proud of because if I am going to, you know, I would love to think that I'm a leader. You know, I really strive to be a good leader. How can I do that to myself and then expect the rest of the community to follow suit? Yeah. Like how can I tell you, hey, I think you need to be prioritizing your work-life balance and then people looking at me being like she doesn't though yeah exactly like so I'm a bit at the time I was like oh my gosh like I'm fine I'm gonna get it done but even then I just wanted to do what I said I was going to do and fulfill all the work requirements I had but even then I probably should have just taken a sickie and I didn't and I like I'm not proud of that and I think that a lot of you should learn from that

and go do you know what that put Victoria even further behind because she didn't just stay in bed and sleep like she should have, she put herself further back. And so I think it's one of those things where we do really need to prioritize rest and recovery and actually even building buffer time and transport time. Like how many times have we booked meetings back to back and just forgotten that it's going to take half an hour to get from one meeting to another, or that you have to go pick the kids up from school in between that, or that, you know, you don't just have to pick the kids up from school. You have to pick them up and you have to get them afternoon tea and then drop them somewhere else. And like all of that time's

written off. Like we need to actually be fully aware of what work-life balance looks like. And don't get me wrong, sometimes that balance is out of sync because it is a balance and it floats back and forth, but it's always about trying to find an equilibrium that really works for you. And researchers have recently said that if you're engaging in side hustles immediately after completing your main job, that is a recipe for burnout. So just be aware of it. I think making sure that you're setting really healthy boundaries is also really important, i.e. don't be Victoria Devine and reply to your emails at 3am. It's just not healthy. It's just not healthy. I've tested it. You burn yourself out. You give yourself laryngitis. You end up with a secondary

infection. It's just not cute. Not cute. So would you say then like penciling it in your calendar, some me time, go to yoga after work. Don't compromise on that. Don't stay long at the meeting. Like is that how you fit it in? 100%. But it's also about finding what is actually balanced for you. Yeah. So like for you, George, I know you're a runner and I know that you do yoga. for me, sometimes penciling in time after work where I can sit on the couch, scrolling aimlessly through Instagram is my wind down time. So it's going to look different for everybody. And I also think there's this really unrealistic expectation of what work-life balance looks like, right? Work-life balance is getting up at 7am and going to a beautiful Pilates class and doing this and

grabbing a coffee. Like, no, mine's actually sleeping in and sometimes scrolling on Instagram. and that's what keeps me straight for the rest of the day. Whereas to me it would be the opposite. Exactly. I need the Pilates and the coffee. Exactly. And don't get me wrong, I still love Pilates, I still love coffee, but I just think there's this unrealistic expectation

of what work-life balance looks like because social media, as we've talked about a million times on this podcast, really plays into it because you go, well, this person, they're so balanced, how good is that? They are, you know, going to work and then straight after work they go to Pilates and then they go home and they make this nourishing green bowl for their dinner and then they have leftovers for lunch the next day like for some people that would just burn them out like some people just need to go home and crash

yeah I get it everybody's different but I think really understanding what your stresses are and what burnout could look like for you is really important so if we're putting all of these extra hours into our side hustle v would it follow that people who do work full-time and have that gig on the side are feeling more stressed out than people no no lol so we're like telling people to have better work-life balance. But interestingly, multiple studies have actually shown that side hustles have helped people live more interesting and fulfilling lives, which is kind of cool. So this study was done by Hentley Business School, and it showed that a sense of fulfillment was achieved from engaging in side hustles. And that translated directly into happiness for their

both main and side hustle workplaces, which is kind of cool. It also found that side hustles empowered individuals to be in control and in charge of their work, which led them to become more emotionally and cognitively invested in their side hustles and also transmits positive emotions that are associated with this experience to their main job, which obviously subsequently improved job performance, which is kind of cool. And interestingly, because, you know, in so many people's employment contracts, it says you can't have another job. Yeah, absolutely. It says you can't have another job without written like approval, written approval or permission from your employer. But that actually might make you

a better employee. That's weird. Kind of cool. Kind of interesting to see how the world is changing as well. But it makes sense if you just still it down. Like, gee, if you're having to prioritize your full-time work and then this side hustle that you're doing and balance it all, like you're probably going to find a better equilibrium than just like being on the nine to five Monday to Friday grant. I actually definitely agree with that. I mean, you're a bit of a side hustle. Yeah. But I love having a full-time job and then doing She's on the Money and then having copywriting. Like you're busy, but it keeps things interesting. Yeah. And I think it's really important to find those things that, as I said before, nourish you and actually align to your

values and keep you engaged. Like that's what life's about, right? 100%. On that inspirational note, V, let's head to a little break. But on the other side, we are going to be talking about all the tax implications. So don't go anywhere, guys. Alrighty, guys, we are back. But before we go any further. We're actually going to have a little listen to a chat V that you had with your mate Tiffany. All right. We are going to talk about Tiff, the time you found yourself in a bit of a tax pickle. Yes. Can you tell us about what happened? Well, I was Uber driving. I had lost my job. I needed a new job. Uber seemed like the way to go. It's pretty convenient. It is very convenient. I had just got myself a new car. So I'm like, oh, this will be a really great way to

also help pay off my car. So I was Uber driving probably full time for about four or five months and when I say full time I mean I was doing it as a nine to five. So I would get up, I would jump in my Uber and I would drive from nine until five. Whoa I didn't realize it was that much. Yeah well because I wanted it to substitute a full-time job. That makes sense. You also then got the option I guess of doing on the weekends or after hours or whatever. Yeah, you can do it whenever you want, right? Yeah. I wanted it to kind of fit in with my day. And then also I could like go to interviews and do all of those kinds of things in order to get myself an actual job, which wasn't hustle material. Driving. I love it. Yeah. Yeah. But in order to make money from Uber, you also need to

work the hours. Like you can't just jump on for a couple of hours and expect to make bank. Yeah. Like I was working 12 hour days in order to make like $600 a week. Oh my gosh, really? So it is, yeah. All right. So it was a bit of a pickle. It was a bit of a pickle. So I was doing it, yeah, for full time for about four or five months.

And then I got a job. Right. So then I stopped doing it full time. And then I was just doing it on the weekend to make a little bit of extra cash. Which is helpful. Which is helpful, yes. But that wasn't the pickle. That was a dream experience.

That was great. I've got a side hustle. I've made money in the interim. It was the tax advice you got. You went and got an accountant. Yes. Who my partner was seeing and had seen before. So I assumed that they were legitimate. Yep. Great. What happened? And I told them that I was Uber driving and she was like, how much money have you made? And I was like, about four or $5,000. Not a lot. Yeah. And she's like, oh, okay. No need to worry. I'm like, what do you mean? No need to worry. She's like, oh, it's less than $10,000. So we can mark it down as a hobby activity. I'm like, oh, hang on. That sounds like a good money. This sounds great. I'm like, oh, so I've just made $5,000 that I

don't have to declare that I don't have to pay tax on because it's less than $10,000 and I can claim it as a hobby. I was really nervous about that because I had not heard about that happening at all. Yeah. I didn't know anyone else who was in that situation. So I asked the tax agent repeatedly, maybe four or five times during our consult together. Are you sure? Are you sure I don't have to claim this? I planned to. Exactly. And she's like, no, no, no, it's fine. You don't have to claim it at all. I'm like, great. Okay. $5,000 in my pocket. Money win. Claim form went through. TLDR. Tax return went through. TLDR, not a money win. Not a money win. And it wasn't until 12 months later, I think it was, that the ATO got in contact with me. And you got audited,

didn't you? And I did get audited. And they're like, you've been Uber driving and you didn't declare any extra earnings that you received whilst Uber driving. And I panicked. You did. And that's where I got to learn about this situation. And I was like, Tiffany, what have you done and it wasn't a bad thing especially once you'd explained it to me it was actually just bad advice that you'd been given because I wasn't in the wrong no but at the end of the day the thing that was really frustrating was you got your tax return done and you signed off on it and when we went back to that accountant because I said look let me help you sort this out I sat you down we went through it all I had a look at your bass and you know worked out what tax you

should have paid because the ATO was obviously wanting you to pay that we had a chat with the ATO and negotiated our way out of it. We didn't have to pay any penalties, which was a money win. We did have to pay the tax though. Went back to the tax agent and she was like, not my circus, not my monkeys. You signed your tax return. It is your problem. It is not my problem. And now she's no longer in business. Oh, surprise, surprise. But I wanted to have this conversation because it's one thing for me to do a podcast and go, hey guys, this is really important. But from your perspective, you thought you did absolutely

everything right. And on that, how do we know? Like if we are going to somebody and we are trusting that they have the right information because we're paying them for a service, they're the person that has the knowledge. What happens? Because we can't trust them. Who can we trust? Where do we get this information from? And I think that that's the big question here. And it's not necessarily about not trusting your accountant. That's not this segment at all. But I really would urge you to make sure that whatever accountant you're using, you're making sure that they're a CPA or a CA and that they are qualified to do what they do. But also knowing that your gut feeling, because Tiff, you were telling me like you knew you shouldn't have been

doing this, but you were like, no, she's a professional. She did it. You signed off on it and it was all good. You told me that. If you're second guessing the situation, you're obviously second guessing for a reason, aren't you? And you probably should maybe get a second opinion then. Exactly. And we don't have to pay for that second opinion. You can actually call the ATO and ask them any question. You can call them and be like, hey, I'm doing my tax return. I'm so sorry to annoy you. I did some Uber driving.

Do I need to declare it? And they will say hard and fast, yes, because that's actually a job. Whereas there is, and I'm not giving tax advice here, you do need to talk to your tax accountant. But when you do declare things, sometimes they feel like doing some crochet blankets and you made $50 here and there by selling them to your friends. The ATO is like, no, keep that money.

Like that's actually a hobby. That's just you doing it. So there is actually a hobby clause in your tax return where you don't have to declare some earnings from genuine hobbies. But I think that's very different than going and trying to earn an income and actually setting yourself up because you would have had to set yourself up with a TFN through Uber, right? Yes. Yes. And I need to register myself too as a sole trader. So I had an ABN that I had to input in. So I was working for myself or self-employed, I guess. But deep down, you knew that you shouldn't have been doing it. And it was just something where you trusted

the person to do the right thing. And from my perspective, I think the important thing here isn't about going, oh my God, here we are to talk about Uber. It's actually just trust your gut, like do the right thing, declare the things that you have to declare. And if you're in a bit of a pickle, over-declare. Yes. Over-declare. You would much prefer to say, hey, I made 50 bucks from crocheting some blankets or selling some dollhouse furniture I made and put on Facebook Marketplace during lockdown, which I had a friend do. Oh my God, wildly successful, by the way. I think that borderline might not actually be a hobby for her anymore. It's now her job. Now full-blown job. But it's about trusting your judgment and trusting your gut and knowing that

there are other resources to look at. Like the ATO posts so much information about what you can and can't declare every year. Smarter Money puts some information on their website about what you can and can't claim. Like there's so much stuff out there. So regardless of whether you're using a tax agent to do your tax return this year, or you are doing it yourself, I think it's just hard and fast. Be truthful. Don't lie. Don't claim things that you aren't meant to claim. Because nowadays it's not the 1960s anymore where they just can't prove it and if they audit you you've got to go find all your paper receipts. You have to have receipts for everything now. In 2022 everything's data matched. The ATO knows they have access to your bank accounts. It's kind of

borderline terrifying at the same time as for me as a financial advisor I kind of love it because I'm like how easy the data matching here is absolutely fantastic. Because you're a perv anyway with all money. Yeah and I don't mind and I mean I have a legitimate business so I'm like what am I hiding? What are you going to say? That I did some financial advice. Wow. Revolutionary. So I'm not worried about it. But I think the real question here is if you are worried about it, like are you doing the right thing or not? Anyway, Tiff, let's go have coffee because we should get back to the actual show. Sounds amazing. V, that was a horror show, mate. It was a little bit of a mess. A little bit of a nightmare.

Yes. I feel really bad because Tiff is one of my greatest friends, but also just that she put so much trust in an accountant that did the wrong thing by her. How can they give you the wrong advice? Look, I think she just, you don't know what you don't know. And that's why it's really important to kind of second guess things and go with your gut and understand, you know, that you can seek a second opinion or a third opinion or whatever you want to do. And at the end of the day, she did end up in a better position. We were able to liaise with the ATO and talk to them about it. And they were like, okay, cool. No problems. We can see how this went wrong. Let's just clean it all up. And we did and it was fine. But it's one of those things that it's just really stressful.

And I really wanted to include that in today's show because it's not just me going, this is important. It's me going, hey, here's a very real, very true example from someone who is very deeply ingrained in our She's On The Money community. You've probably seen on every money win thread ever because she always has great money wins and it's so rude. But it's one of those things where just listen to Tiff. This is her story. This is how it works. These are real people from our real community who are going through things that you could avoid just by listening to a podcast. Does the accountant cop anything for doing the wrong thing? No, not at all.

Are they covered by an insurance or something? No, no, no, no. So when you sign off on your tax return, G, you're taking responsibility. So even though your accountant prepared it in full. And is being paid for that service. for that service. You then got given your tax return paper. You would have reviewed it and signed it. And that's then you taking complete responsibility for it. So there's no responsibility on that accountant. From my understanding, that accountant is no longer an accountant. So don't worry, guys. You are completely safe from that one. But it's just so important to remember that

at the end of the day, the buck actually stops with you. You can't just outsource it to an accountant and be like, whatever, it'll be fine. Like, yes, it usually 99.95% of the time is, but it's always about trusting your gut. And if you don't feel right about something, which you heard from Tiff, she didn't feel right, but she was like, oh, she would know, like she's an accountant. When it finally came back to bite her, thankfully she had me, who's not an accountant, but knows, okay, like, let's just deal with this. And we did end up getting another accountant involved and getting it all cleaned up and it was so fine. But it's one of those things where that was really stressful and you can avoid that. Yeah. Brilliant. Okay.

V, let's move on and talk about some intimidating things. I'm talking bass. I'm talking GST. Sexy. At what point in our journey do we need to register for GST and how much should we be putting aside? All right, let's start with how much you should be putting aside. And a general goal or rule of thumb is usually between 20% and 30%

of your income to a second bank account for tax and GST. So GST is 10%. It is a goods and services tax and, from my perspective, it's very left pocket, right pocket. Like if you are charging GST, you just put that money aside and then it goes and gets paid. And then if you are paying GST, you put that aside and it gets reclaimed. So it's very left pocket, right pocket, but it can feel like a lot, but a lot of small businesses don't register for GST upfront. They actually register for it once they hit that $75,000 turnover point. So that's the point at which you need to register for GST, but you can

actually charge GST from day dot if you register and you want to start charging it, which for a lot of small businesses, they do lean into that because then there's no like once you hit a certain amount of revenue, they don't have to reset expectations with clients. And with freelancers, this can actually lean into being quite a good way to like establish reliability in a way. Like if you're charging GST, your client's automatically going to assume you earn more than $75,000. It also means that once you do hit that mark, you don't have to reestablish with a client and be like, hey client, just so you know, next month's invoice is going to have an additional 10% on it because to the client, that just feels like they're paying an extra 10% and they're being like negatively

impacted. Whereas sometimes people might want to set that expectation from the very beginning and it's all very easy. So I think it's about understanding what that means. I would also here plug my other podcast, The Business Bible. If you haven't already listened to that and you are a side hustler or a small business owner or even a big business owner, I would say that that's a very good place to start because not only do we go through all of those structures and what your obligations are, but there is a specific episode where I actually go through my personal banking structure and explain which bank accounts I have, why and how much money I put in each of those. And I think that that can be quite powerful because if you have the right structure set up,

your business flows so much easier, George. Like if you're a small business owner and you only have one account and all your money comes in there and you're paying your GST and your BAS and you're paying your salaries and you're paying for all your expenses from that, it can get quite murky. Whereas if we have a few different accounts and we're actually putting 30% of our income into there for tax, when tax time comes, not only do we have enough money to pay tax and we don't have to blink an eye, but usually there are refunds on top of that. So we end up in a better position where tax time comes and it's not as painful as it could be. In fact, you're kind of looking forward to tax time because you know there's probably a bit of a refund there and you're like oh if I get

that done like everything will be much easier and I'll probably have a few grand in my back pocket that I could spend on something else so I think it's important to understand what that means and how it works but to add to that if you're a taxi driver or an uber driver you actually charge GST the entire way regardless of what you have ever earned and then if you're a non-profit organization with an annual turnover of more than 150,000 that's your GST threshold so instead of the 75 And then if you're a business and you are a bit smaller and you're like, yes, but V, I also want to claim fuel tax credits, you do have to be registered for GST. And then international retailers with Australian sales of more than $75,000 also fall into

that bucket as well. So as I said before, if your annual turnover is under that threshold, you can still register if you want. There are obviously benefits for it. But the thing I would do is actually just chat to your accountant about what structure would work for you. And if you are a small business owner, even just sitting down with an accountant as a big once off, like, how do I do this? What does this look like? It's going to pay dividends. I

promise it will be a very important meeting. Are there any other benefits to registering VLORD? Look, once you're registered for GST, you don't actually pay GST on business expenses. So that's where I said it's like left pocket, right pocket. If you're registered for it, you can claim it, which is kind of cool. So you'll still get charged GST on invoices and you'll still have to pay it. But when tax time comes and you file your tax return with the ATO, you get that back. So that's kind of cool. And what do I need to register? You need an ABN, my friend. So an Australian business number. However, if you're registering as a company, then you'll need an Australian company number, which is called an ACN before you apply for an ABN. And then after GST registration,

all you need to do is add GST to the prices that you are charging, issue tax invoices to your customers, keep receipts and invoices to claim back all the GST that you've paid on business expenses that year, and then submit a business act. We're going pretty deep into the business bible side of things so let's move to the next question again if you haven't listened to the business bible i absolutely would because i'm really biased i thought it was great it certainly was also coming back so is it when probably later this year wonderful once i've got the property playbook under control and that one's back perfect it's just a few things i'm the queen of biting off more than i can chew yeah you really are the i mentioned bass earlier but i didn't know what it

meant bass is sexy what is it it is a business activity statement so a business activity statement is a form that you fill out between one and 12 times a year. So it completely depends. I do BAS and I do BAS quarterly. So that means that I do four BAS statements each and every single year. And it really depends on your business size as to how often you do this and when you do this. But basically the ATO uses the information that you provide on your BAS to work out how much GST you might have to pay or how much of a refund you might get. and it's also used for like pay as you go tax so for all of my employees it means that I get to say to the ATO a few times a year this is what I've done this is how much money I'm earning

this is how much money is coming in and out and how it works which means I can be more on top of my tax so I don't just wait until June 30 to do a big tax refund or a big tax submission I actually do it throughout the year and it means I actually prepay a lot of my tax and then we do a big kind of audit at June 30 and go, did I pay the right amount? Is there anything I need to make up or do I get a refund? So for me, I personally quite enjoy BAS and I enjoy it because I feel like I'm on top of my business consistently, but I also really enjoy it because it means that I don't just get a really big tax bill at the end of the year. I just realized that I do use BAS. I pay a quarterly. You pay quarterly. So there you go. She's on the money. Check you out. Oh, lordy lord. So what

information do I need for my BAS? So you'll need to collect a record of how much GST you collected on sales and how much was paid on purchases. You won't need to submit your tax invoices when you lodge your BAS. You just need to kind of like have them on hand. So it's not as official as a tax return. It's not like you're doing that all the time. You're just letting them know how many dollars you've made and vice versa. And the ATO might ask to see them later. As we've said, don't claim things that you haven't actually done. But because your BAS is usually used for other tax reasons, you're probably going to need to provide extra information on your business, your income, any employees, and it's linked to the ATO and stuff. So it's actually, I think it's pretty

cool. I think it's pretty sexy. This is pretty business focused, but I hope that even if you're not a business owner, you listen to this and you're like, oh, that's kind of cool that businesses have that flexibility to like pay tax more consistently so that they don't end up really overwhelmed at tax time. 100%. I think it's kind of cool. Absolutely. And just really important to remember that if you are starting a side hustle, that you need to pay tax on it. Yeah. And there's lots of different structures that can actually help you and support you and make sure that it's not all overwhelming at tax time like the business bible go go go my friends stunning fee let's leave it there oh my god well i guess that's all we have time for today so can you wrap the boring but

important stuff the advice shared on she's on the money is general in nature and does not consider your individual circumstances she's on the money exists purely for educational purposes and should not be relied upon to make an investment or a financial decision never and we promise victoria Devine and She's On The Money are authorised representatives of In Focus Securities Australia, Proprietary Limited, ABN 47097797049, AFSL 236523. We'll see you on Friday, guys. See you later, G.

Sorry I wasn't paying attention to that. I just realised I had food on my top. See you on Friday. Bye. Thank you.