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7 tips to make tax time easier as a freelancer

Being prepared can make tax season a whole lot simpler.

For freelancers, especially first-timers, tax time at the end of the financial year (EOFY) can feel overwhelming, but it doesn’t have to be. Here are seven tips to help you get ahead.

1. Working-from-home deductions

If you’ve been working from home, you may be entitled to claim tax deductions for expenses related to generating your income. There are a number of criteria to consider before claiming an amount in your tax return, for instance, you should consider whether you can claim the revised fixed rate method of 67 cents per hour from 1 July 2022. You should consult the ATO website about the rules for making a claim, in particular, the eligibility criteria which includes the records required to substantiate the hours you worked from home. Learn more about the method.

Other calculation methods may also be acceptable and more appropriate to your circumstances.  You should consider which method is best for you and the criteria required to claim a deduction.  Further information is available at the ATO website.

2. Pay-as-you-go

If your business and investment earnings are more than $4,000 a year, you may, subject to other conditions, have to pay PAYG instalments. This means you are required to make tax payments throughout the year.

Make sure you have an Australian Business Number (ABN). Many clients will not deal with you if you don’t have one. They are relatively easy to obtain via the Australian Business Register website.

3. Put money aside, regularly

Make sure you regularly set money aside, or are aware of future tax payments, so you are able to meet your obligation.

A business activity statement (BAS) is issued by the ATO on a monthly, quarterly or annual basis to businesses that have registered for an ABN and GST. You’ll generally be liable to pay a penalty if you don’t lodge your BAS or pay your tax on time.

4. Keep receipts

You may be able to claim for freelance-related expenses. Keep receipts for things like:

  • Home-office equipment
  • Car expenses
  • Phone and internet usage

Please refer to www.ato.gov.au for details of what you might be able to claim.

If in doubt about a receipt – keep it. Also, your accountant or tax agent should only claim expenses that you have receipts for.

5. Separate bank accounts

It's a good idea to keep your personal finances separate from your freelance finances. That may mean setting up a transaction and savings account specifically for your freelance business, that ideally links to your accounting software so you can easily keep track of your finances.

6. Super contributions

Being self-employed means you don’t have an employer to make super guarantee payments on your behalf. So it’s wise to think long term, especially when it comes to retirement, and make personal contributions to super. Contributions you make to an eligible super fund may be tax deductible to you. Check the ATO Website for more information.

7. Chat to an expert

Getting expert advice could save you money. It’s worth doing some research, including asking for recommendations, to find a local tax expert or accountant with the right skills to help you.

Check out MoneySmart for helpful info and more freelancing tips.

Tax tips & guides for 2024

Take a look at our useful tax guides to help you get started.

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Things you should know

  • It’s important to remember that tax laws are complex, and you should ensure that you’ve confirmed you can claim an expense before including it in your tax return. Reliable sources of information include the Australian Taxation Office (ATO), your accountant or financial planner.

    The Australian income year ends on 30 June. You have from 1 July to 31 October to lodge your tax return for the previous income year. If you use a registered tax agent to prepare and lodge your tax return, you may be able to lodge later than 31 October.

    Tax law is subject to change. This article takes into account the tax law as at April 2024. For the latest information, check the ATO website or with your accountant or financial advisor.

    The information provided is of a general nature and doesn’t take into account your personal financial situation – we suggest you seek independent taxation and financial advice.

    This page is intended to provide general information only and does not take into account your individual objectives, financial situation or needs. Taxation considerations are general and based on present taxation laws and may be subject to change. You should seek independent, professional tax advice before making any decision based on this information.

    Commonwealth Bank is also not a registered tax (financial) adviser under the Tax Agent Services Act 2009 and you should seek tax advice from a registered tax (financial) adviser if you intend to rely on this information to satisfy the liabilities or obligations or claim entitlements that arise, or could arise, under a taxation law.