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Andy Brice
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Patrick McKenzie
Bingo Card Creator

Should I report paypal income with taxes?

I've earned around $7000 over the last year through casual programing jobs. The clients paid me through paypal and transferred the amount to my bank account. I'm a student and don't have a 'regular' job. Its time to lodge my tax returns so I'm wondering if I should tell them about the income that I earned via paypal?

P.S I'm in Australia and all of this amount is from clients from USA and Canada.

Aussie Student developer
Thursday, August 07, 2008
Yes. It's not just a good idea to follow the law and pay your dues. There might also be some cooperation between your government and the foreign ones or Paypal.

Besides, if the australian tax system is anything like those I know, you won't pay any taxes on $7000 anyway. You might also be able to deduct expenses for business and education.
Matt Winkelmann Send private email
Thursday, August 07, 2008
Legally, you'll need to report it. Given that the .au tax-free-threshold is $6000, you probably won't end up paying much. You can deduct your computers, Internet access and so on anyway.

(IANAC, of course).
Ian Howson Send private email
Thursday, August 07, 2008
Yes you should declare it.  Unexplained bank deposits aren't a good thing and banks are required to report all kinds of stuff to the ATO (the australian tax office for the non-australians) so theres a pretty good chance of it biting you in the arse sometime in the next few years if you dont.

The ATO collects huge amounts of stuff from the banks then does all kinds of crazy data mining designed to ferret out things like unreported income.

I'm guessing you brought that money in in bits because if you're bringing more than a couple of thousand into the country at a time you'll find your bank will actually phone you within hours of the transaction.  Ive had half a dozen phone calls from Australian banks wanting explanations of international transactions.
andrew Send private email
Thursday, August 07, 2008
Of course you should report it - as I suspect you well know!

But seriously, who's ever going to know..?
Thursday, August 07, 2008
Thanks All. Andrew, I'm in the same state as you :). Another quick question for those who know the answer..what section of the tax lodgement should I declare this income in?

I was thinking 'Section 20 - Income - Foreign source income and assets or property' since the income has been from foreign clients, but it seems to be only for the income you earned while physically being outside Australia?
Aussie Student developer
Thursday, August 07, 2008
P.S andrew, all of my transactions are from 'Paypal Australia', I haven't had any direct deposits in my bank account from outside Aus. as far as I know..but yes, everything has been < $1500 per transaction
Aussie Student developer
Thursday, August 07, 2008
Go talk to an accountant. An hour-long consulting session will not cost too much and will be worth it.

They'll know where you should fill the income in on your tax return, whether you only declare it when you bring to Australia, whether you are eligible for special tax breaks for importers or new small businesses.

Especially if you continue doing this work and increase the amount you earn from it.

War story:
When I sold my Australian consulting business I was eligible for two different 50% small business tax breaks I didn't know about, for a total reduction of 75% of my tax bill. My accountant knew about these things.
Steve McLeod Send private email
Thursday, August 07, 2008
Yes you need to report it - just like the rest of us do.  Taxes helps to pay for all the things that make this country great.  Like your government subsidised education!
Another Aussie
Thursday, August 07, 2008
Don't know about Australia, but in the US, the tax laws generally work like this:

Hiding income -> Ceased assets, Prison time
Creative expenses -> Audit time argument, maybe a fine

Always declare, then claim as many expenses as you can, worst case you owe more.  Hide income, get caught, and it's much much worse.

Thursday, August 07, 2008
I don't know what the law is in Australia, but in North America you need to report all income.

Why wouldn't you report if it's the law? What's the point, especially for such a small amount. It doesn't make sense. It actually never makes sense. What's the point of having millions if you're in jail!
Stephane Grenier Send private email
Thursday, August 07, 2008

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