Dear Lifehacker, I recently did a photoshoot for a company my cousin works for. The photos were entirely free and I provided them with a selection with my watermark on them. The company has since got in contact with me, asking to buy the rights to the images so they can edit them and use them in publications.
I don’t have an ABN, so am I allowed to sell my images? If I do, what are the tax implications? Is there any way to provide a tax receipt? And what would be the market value for this kind of sale?
Thanks, Taxing Images
GST picture from Shutterstock
Dear TI,
First, our usual warning: we’re not registered tax experts, so for specific advice, you should speak to a professional. With that said, the broad outlines of the issue are fairly clear.
If you’re not planning to set up as a business and this is a one-off event, then acquiring an ABN isn’t going to be worth the hassle. Depending on what you were intending to charge, your cousin might be better off taking you out for a meal and then charging it back to company expenses. As commenters below suggest, you can also opt-out if its a one-off.
However, if the company wants a tax invoice or you intend to continue in this line of work, then you will need to register for an ABN and charge GST. It’s not an especially onerous process, but it will mean you need to lodge a quarterly BAS as well as your annual income tax return.
As for the question of how much you should charge, the short answer is a combination of how much the market will bear and how you value your time and equipment. Our article on how to set freelance rates can help you out there.
Cheers
Lifehacker
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Comments
17 responses to “Ask LH: Do I Need To Register For GST?”
If your business earns more than $75,000 in a single financial year, you’re required for GST, regardless of whether it all came through from a single sale or from multiple sales spread out over the year.
The GST registration threshold is $75k now.
If you don’t have an ABN, and you need to invoice for actual money, you will need to fill our a “statement by supplier” form and state that you are a hobbyist (form is at http://www.ato.gov.au/content/downloads/BUS38509n3346_5_2012.pdf ), otherwise they are obliged to withhold 46.5% of the payment. This is the best course of action if you don’t think you’ll be making money in the future from your own business activities.
However, it’s good not to confuse having an ABN with GST registration. You can have an ABN and not be registered for GST, as long as your business doesn’t bring in over the $75k threshold. I myself fall into this category. For my 2c worth, if you think that you may be making any money in the future from your own business activities, it’s worth getting an ABN. It DOESN’T mean that you have to do quarterly BAS statements – that is only if you are registered for GST. It just means that it’s a hell of a lot easier to get paid.
Go to http://www.ato.gov.au/individuals/ and under “Tax Topics A-Z” on the lower left side, select “Goods and Services Tax (GST)” for more (and correct) info.
I updated it to $75K, just needed a bit of time to confirm it. Thanks =)
Thanks for this. One point (which I should have emphasised more in the original post): even if you’re not required to register for GST, some businesses won’t be happy to deal with you as a fellow business if you don’t.
The income threshold for GST registration is $75,000 or more ($150,000 or more for non-profit organisations).
Conversely, if your business earns less than $50000 you are not required to register for GST.
the “how to set freelance rates” link just brings me back to this page.
Fixed!
Hey Angus, It would be nice if you could change your third paragraph. Or add a note.
Tax receipt isn’t the best terminology. If the issuer is registered for GST it should be “Tax Invoice” and “Receipt”, or if the issuer isn’t registered for GST then just “Invoice”.
Also they can only charge GST if they are registered for GST. Just registering for an ABN doesn’t mean you’re registered for GST. Also for the Zombie Jesus reply, it’s over $75k you’re required to register for GST not $50k anymore.
Aside from the tax issues. TI should do up some form of basic contract to say that the company is able to use the images in publications and edit them etc. But that copyright stays with TI and that the company may not on-sell them etc.
Yeah, I was just updating it as you posted =)
Good point, have adjusted.
“Tax Invoice” is fine if you’re not registered for GST, you just need to include a line item stating GST $0. All this means is that the purchaser cannot claim the GST input credit because no GST was payable.
All the necessary info is freely available on the ATO web site.
Incorrect. http://www.ato.gov.au/businesses/content.aspx?menuid=0&doc=/content/48360.htm
The wording tax invoice should only be used on invoices with GST. An invoice that does not charge GST should be setout as per the example “Goods or services that do not include GST” and only say “invoice” and include the statement “No GST has been charged”.
Fair enough. Has changed since I last invoiced 🙂
The tax dept isn’t likely to care about it unless you are a consistent offender. Even if they do call you on it, all you need to do is tell them it’s a one of. Besides that you can earn a certain amount without declaring it anyway. Not sure what that amount is though but it’s higher than you might think.
Lifehacker, very disappointed, please fix the mistakes in your article and if you’re going to give GST advice then please use a tax agent or accountant to write the article.
1. This transaction sounds like a hobby, no business intent, there’s no money limit, simply do a non taxed invoice.
2. register for gst if turnover is 75k+, or an exempt business eg taxidriver.
3. this meal in this case would be considered personal and non deductible, do not use company account to pay for meals with your friends. A deductible expenses must be necessarily incurred to produce income. You don’t need to buy meals to make photos.
Thank you.
You do not need to register for GST to have an ABN.
http://lmgtfy.com/?q=do+i+need+to+register+for+gst
A warning anecdote: I was freelancing, and worked for 12 months under my ABN. At Tax time, I had to pay the normal, correct rate of tax ( I earned about $50k, so didn’t have to register for GST ).
The next year, the ATO automatically guestimated the tax I’d pay if I was earning the same amount ($50k) again, and charged it as part of my tax return.
Apparently it was because my ABN was still active, and I wasn’t reporting any earnings, so they assumed I was waiting until tax time to report.
$3k later – I cancelled my ABN on the spot. Argued the point with ATO, but they wouldn’t budge.
do you have to have an abn and be gst registered to charge gst