Ask LH: Do I Have To Report Income On My App Sales?

Dear Lifehacker, I'm developing a paid app to be published on Google Play (my first paid app). I am wondering what do I have to know about? For example, tax and the likes, I cannot seem to find a lot of guidance on this aspects online, would you be able to help me? (And yes, I am in Australia.) Thanks, Mobile Money

Tablet picture from Shutterstock

Dear MM,

Once again, I'm dipping into my "I'm not an accountant" file, and I should state at the outset that depending on your financial situation it may be wise to check with one, or at the very least get a determination from the ATO.

In broad terms, however, the rules are quite clear. If you're developing apps in order to generate revenue, then the ATO is likely to rule that you're in effect running a business as distinct from coding for the purposes of a hobby. That means that you're obliged to declare any and all income from your app activities, although at the same time if it's your sole source of income you may be able to claim relevant deductions for the creation of your apps.

Google adds relevant local taxes, including GST into its app pricing for Australian consumers, which means that you've also got to make plans for registering for GST and an ABN, which will also make it easier to claim those business deductions. Google makes it plain in their developer guidelines that the onus on proper tax reporting falls onto your shoulders.

Cheers Lifehacker

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Comments

    Check out "Business or hobby" guidance with the ATO

    If you earn anything, it's an income. If you earn 1 cent interest in your savings account, it is an income and it should be reported as part of your total income. How "creative" you get with how you report it etc is up to you and your accountant.. but an income is reportable.

    There's a lot of exceptions the rule(s) and creativity in tax avoidance.. just be sure that it is tax avoidance, which is not illegal but frowned upon, and not tax evasion, which is illegal. And be sure you don't employ any creative methods that are actually forms of money laundering.

    In the end, it's usually safer just the report it as an income, register yourself as a business and pay GST installments.

    Please don't give advice if you're not positive on what you talk about.

    Not everything you earn is classified as income.

    It will depend upon whether the ATO classify you as running a business, factors include time spent, money made, money spent, your structure.

    Secondly you do not need to register for GST unless your turnover is over $75,000. So unlikely you will need to. Also you do not normally pay GST in instalments. You complete activity statements monthly, annually and quarterly.

    Please get advice from a recognised Tax Agent, rather than from Lifehacker.

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