As many of you may know by now, speaking to the ATO/Accountants can be daunting. The language used throughout a conversation can be confusing and definitely won’t make sense if it is the first time you are learning some new terms. We have decided to break down some of this jargon for you in this blog. Accounting 101 chat!
PAYG – Pay As You Go.
PAYG is a term used by both accountants and the ATO. The term PAYG, refers to quarterly tax instalments that are automatically assigned to a sole trader if they had a previous tax debt the year before. You can read more about PAYG on our blog here.
PAYGW – Pay As You Go Withholding.
PAYGW is the term used by the ATO in relation to the PAYG tax withheld by employers on their employee’s wages and then remitted to the ATO on their behalf.
It is generally described as adjusted gross income (which is your total income, known as “gross income,” minus any deductions or exemptions allowed in that tax year). Taxable income includes wages, salaries, bonuses, and tips. In the adult industry this also includes the cost of any gifts that were given in your line of work. For example if you were gifted a 10K car, you would need to add in 10K into your overall income.
One of the most confusing aspects of taxes is all the various deductions and exemptions you can take advantage of—if you know how. Tax deductions allow you to deduct from your income before you calculate the amount of tax you owe. This lowers your taxable income, ideally pushing you into a lower tax bracket. Please see more about deductions in our industry in our tax fact booklet, which you can download here.
Assessable income is income that can be taxed, provided you earn enough to exceed your tax-free threshold ($18,200). Examples of assessable income are: salary and wages, tips, gratuities and other payments for your services.
BAS (Business Activity Statement) – This is a form submitted to the ATO that is required if you are a business that earns more than $75K in a financial year. This form reports your tax obligations including GST. You can read more about being registered for GST here.
We’ve created a FREE downloadable Tax & Bookkeeping Guide that is industry specific!
To download, simply complete the form below.