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How do you work out your tax

how do you work out your tax


Best Answer: for self employed contractors, there's a what's called an 'Instalment Activity Statement' they could pay. what this activity statement basically means is after lodging a tax return advising the tax office you're self employed and what your tax liabilities are for that year, the tax office will then assume your situation (in your case being self employed) to stay the same and estimate your tax liabilities for the coming financial based on the previous years' return and issued out instalment activity statements for you to pay your tax in advance.

these statements will get divided into 4 quarters, which means if your tax liabilities for the previous year was $2,000 for example, they will increase this slightly to say $2,500 and you'll pay 1/4 of $2,500, which is $625 every 3 months, so by the end of that financial year, you would have already paid $2,500 towards your tax

bill. if you've paid too much, the tax office will refund the difference to you, if you're still slightly short, then you'll just pay the difference then.

the instalment activity statement system won't start till your husband lodges his first return as a sole trader, in the mean time, put away about 20% of what he gets paid every week/fortnight, that should be enough to cover his tax liability.

as for GST, if he's not registered for GST, there's no need to do anything till when he does his tax return, if he is registered, just worked out how much money he's make for that quarter, work out 10% of that total income then work out how much expenses for that quarter, work out 10% of the expenses, the difference of 10% total income and 10% total expenses is what he need to pay to the tax office for that quarter.

Category: Taxes

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