Let's face it - nobody became an artist, musician, or designer because they love crunching numbers. But here's the reality: understanding your tax obligations isn't just about keeping the ATO happy; it's about keeping more money in your creative pocket. And in 2025, with the new tax rates rolling out, there's never been a better time to master your tax situation.
Think of tax like your least favourite commission - you might not love doing it, but getting it right means you can keep doing what you love. So, let's break down everything you need to know about paying tax in Australia, especially if you're in the creative industry.
Here's the breakdown of the new tax rates that will apply from July 1, 2024:
| Income Bracket | Tax Rate |
|---|---|
| $0 – $18,200 | 0% |
| $18,201 – $45,000 | 16¢ for each $1 over $18,200 |
| $45,001 – $135,000 | $4,288 plus 30¢ for each $1 over $45,000 |
| $135,001 – $190,000 | $31,288 plus 37¢ for each $1 over $135,000 |
| $190,001 and over | $51,638 plus 45¢ for each $1 over $190,000 |
Remember: Don't forget about the 2% Medicare levy on top of these rates!
This is where things get interesting (and sometimes confusing) for creative professionals. The ATO has specific guidelines about what constitutes a business versus a hobby, and it matters more than you might think.
Here's where choosing the right business structure can make a massive difference to your tax bill:
| Aspect | Sole Trader | Company |
|---|---|---|
| Tax-Free Threshold | Yes ($18,200) | No |
| Tax Rates | Personal rates (up to 45%) | Flat 30% (or 25% for small business) |
| Administration | Simpler | More complex |
| Setup Costs | Low | Higher |
| Asset Protection | Limited | Better protection |
Consider this: If you're earning under $70,000, being a sole trader often makes more sense due to the tax-free threshold and lower administrative costs. However, if you're pulling in over $120,000, a company structure might save you significant tax dollars.
Here's where it gets fun (yes, tax can be fun). Creative professionals often miss out on legitimate deductions because they don't know they can claim them.
Focus on the big-ticket items first. While every deduction counts, spending hours tracking down that $5 coffee receipt might not be the best use of your creative time.
The creative industry is evolving, and so should your approach to tax. Whether you're just starting or you're an established professional, understanding your tax obligations is crucial for long-term success.
Remember these key points:
If you need support or have questions, please contact us at Amplify 11.
If your annual turnover is $75,000 or more, you must register for GST. However, even if you're below this threshold, voluntary registration might benefit your business, especially if you work with larger clients.
If you're not claiming all eligible deductions, keeping poor records, or using an inappropriate business structure, you might be paying too much. Regular reviews with a tax professional can help optimize your tax position.
Yes, if you can demonstrate you're running a business rather than a hobby. The ATO looks at your business-like approach and intention to make a profit, not just current profitability.
All your income sources need to be declared and will be combined to determine your tax bracket. This includes creative work, regular employment, and investment income.
PAYG instalments will be calculated based on the new rates from July 1, 2024. You may need to adjust your instalments to reflect these changes and your expected income.
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