f
TAGS
H

Why the federal budget doesn't help the gig economy

Budget 2020

Another year and another federal budget in Australia.

So what did small business get?

What did us freelancers and gig players get?

We got an "instant tax write off" of purchases up to $30,000.

That is not bad I guess, if you are making investments...........but what if you are not? 

What if you are in the gig economy, jumping from job to job, you don't need to make major investments in your business.

The most investing you would probably make is up-skilling with a training course or purchasing a new laptop or phone, which would probably be worth a maximum $5,000 combined. Or maybe a new car, if you could afford the whole lot up front, which I doubt.

As someone in the gig economy you just need to be able to manage multiple jobs and generate more income, it is not like you are going to buy a factory, a major piece of equipment or pay 12 months rent up front.

You are probably using your laptop and trying to balance your life with all other family, social and economic demands.......the most important investment is yourselves and your families.

What did the budget give you?

Did you get anything?

The freelancers and gigs

The gig economy is being touted as the new way of life for many modern income earners.

Just google "gig economy" and you will find the articles explaining what it is all about. 

Just think "Airtasker" or "Uber"

These people come with their own characteristics and requirements, they are generally not of the corporate mindset, rather of the flexible, family, passion and community mindset. 

So for these people, trying to earn an income should be made easier, with less red tape from government compliance.

Enough is enough.

What could the budget have done?

Well, I am no budget analyst but if major changes were made, it would be all over the news.

However, the government sticks to the same policies:

  • Income tax rates cut
  • Instant tax write offs

What about the GST threshold?

GST - the basics for freelancers

This part will be explained best if we use the example of Jane, the freelance management consultant, single mum, coffee lover, yoga lover and legend.

Jane runs her business in Australia, and her annual turnover (revenue, gross sales) is $75,000 AUD, so she has to register for GST. $75,000 is the governments threshold, you must register for GST.

In effect, that means that Jane now has to give the Australian Taxation Office 10% of the $75,000.

That equates to $6,818.

Take away that $6,818 from $75,000 and you have $68,182 in annual income.

(For simplicity, let's not add in deductions here but we could estimate annual deductions of maybe $10,000.)

Take off an estimated 25% for income tax and it is even less..........

What could a single mum do with $6,818 a year ($5,113 after 25% tax)? 

A fricken LOT! 

How on earth could a single mum manage a life on an income like that? Or a single dad? 

Given the cost of rent, food, utilities, schooling, technology and all other demands, that does not leave much to save or play with. 

Not only that, it is an administrative burden placed on freelancers that means they need to allocate resources and make decisions such as:

  • Bookkeeping / accounting software - they will have to pay someone or learn how to do this themselves
  • BAS reporting - also, they have to pay someone or learn to do it themselves

So what did the budget give freelancers and gig operators as far as GST goes?

Nada, nilch, nothing, nianti. 

Suck it up.

Raise the GST threshold

So how about raising the GST threshold, to say $125,000?

This would allow Jane to earn say $110,000 without the hassle of GST reporting. 

That could be around an extra $10,000 in her pocket.

This level of income would also allow her to pay for other things in her life and benefit herself and her family, even her community. 

But no, the federal government tells us that we are "better off" with these other budget measures.

Really?

Have you even looked into the GST threshold?

Not convinced

So I am not convinced, and I never am until I see data.

So government, have you looked into this?

Is is an option?

Why no? Why yes?

What did you ask the community?

Did you ask the community?

I wonder.....................



 

This product has been added to your cart

CHECKOUT