This document is written by sex workers for sex workers. We recognize that sex workers are in the best position to share information with other sex workers. With tax issues this is particularly relevant as there is no information that has been specifically designed with us in mind. We also face discrimination with financial institutions and acknowledge secrecy and discretion is of the utmost importance to us. So we have put this together to help each other. It is written by sex workers to share our experience on how we have learnt to work the system so the system doesn’t work or dominate us. So put your pointiest stilettos on, get your whips and cattle prods out…. We’re going to switch from subs to doms and rule TAX!

DEFINING TERMS

What is an EMPLOYEE?

An employee is someone who is employed by an establishment. You work for someone else and give them a cut of your money. Being an employee was the main way people use to be employed in the sex industry, but now establishments are moving away from having employees and are now saying they are taking a cut of your money for ‘room rental’. Because establishments do this they no longer need to take your Tax File Number and will not take tax out of your income. The good news is it means they will no longer ask you for your real name and other personal details.

Private and self employed workers

You are a private or self employed worker if you work for yourself in your own home or as an escort or if you work in a place that doesn’t require you to fill in tax forms. The Tax Department then considers you to be self employed which means you have to keep your own records.

Book keeping

If you work for yourself or work for a place that doesn’t require you to fill in tax forms, you still need to pay tax because they Tax Department considers you to be self employed. This means your need to records of all the money you make and spend in relation to business. Each job and expense needs to be entered and things like if you go away or are sick. The act of keeping this record is bookkeeping. Be aware these documents are legal documents and the Tax Department can demand a copy and you will have to give it to him

Income

An income is any money that comes into your business. All the money you get paid should be recorded as your income.

Expenses and deduction

Expenses are any money that is leaving your business. It is all the things which cost you money to be in business such as phone bills, rent, and advertising. All expenses should be recorded and have receipts, statements, cheque stubs’, invoices to verify the expense has been paid and to whom. The Tax Department can demand this information and you must supply it to them.

Net income

Net income is the amount of money you have left over once you take away your expenses from your income. Some weeks you may make money in your net income, but some weeks your expenses may be greater than your income so you walk away in debt for the week. This information needs to be recorded in your Record Keeping Log. The Tax Department can demand this information and you must supply it to them.

Expenses and Deducations

Keep every single receipt you think could be a deduction. Since GST came in, receipts must now show the name of the shop, date, amount paid, description of what you bought (goods or services) and preferably an ABN. These will include records such as receipts, dockets, invoices, diaries, bank statements, deposit books and cheque butts. The official word from the tax man with………

EXPENSES AND DEDUCTIONS

What tax deductions can or can’t I claim?

You should keep receipts for all the work-related expenses you have claimed or intend to claim as a tax deduction. This is an ATO table of all the deducations and clains you can and cannot make...

Category	Tax deductions you can claim	Tax deductions you cannot claim
Dance lessons	You can claim a tax deduction for the cost of classes taken to maintain your existing dance skills or to learn new dance skills.
Fitness		You cannot claim a tax deduction for the cost of maintaining your general fitness and body shape.
Clothing	Only clothing used solely for earning income is tax deductible, for example, items like costumes and lingerie.	Items such as dresses, skirts, blouses, trousers, shirts and shoes for everyday use are generally not allowable tax deductions.
Consumables	You can claim consumable items like condoms, lubricants, gels, oils and tissues, used solely for earning income, as a tax deduction.
Cosmetics and hair care	You can claim stage make-up, and material used for removing stage make-up.	You cannot claim the cost of general hairdressing and make-up or beauty treatments as a tax deduction.
Child care	You may be eligible to claim the new 30% Child care tax rebate. See this year’s Taxpack for more information.	You cannot claim a tax deduction for child care expenses.
Advertising	You are able to claim the total cost of business advertising related to your work in the adult industry.
Telephones	If you operate from home and maintain only one telephone (mobile or land line), you can claim a proportion of your rental, and the cost of your business phone calls. Where a phone (mobile or land line) is only used for business (usually a second phone) you can claim all of the costs as tax deductions.	You cannot claim connection costs. You cannot claim a deduction for unlisted or silent telephone numbers because these are deemed a private (non-business) expense.
Motor vehicles Information on how to claim for motor vehicle expenses is outlined in TaxPack.	You can claim motor vehicle expenses if you use your motor vehicle in the course of operating your business, for example, to travel from client to client.	Unless you use your home as a place of business, the cost of travelling from home to work and from work to home is generally not an allowable deduction.
Tax agent fees You can check tax agent registration on our website, www.ato.gov.au	You can claim the costs associated with: preparing income tax returns and activity statements objecting or appealing against an assessment, or getting professional tax advice from a registered tax agent, or a barrister or a solicitor.
Tools of trade	You can claim the cost of replacing or repairing things like equipment, adult novelties, and other apparatus used in your work. The full cost of tools is not deductible in the year they were purchased. These types of ‘capital’ expenses can only be depreciated or ‘written down’ over the life of the tool. However simplified depreciation rules allow depreciating assets costing less than $1000 each to be written off immediately if you conduct a small business and have elected to use the Simplified Tax System.
Place of business expenses – separate premises	If you maintain separate premises used solely for work, you can claim all expenses incurred in maintaining those premises. Casual rental of work premises, such as room only or hourly rental, may also be claimed.
Place of business expenses – home office	If you work from home you can claim the additional running expenses of an office or room used for income producing. This can include electricity and cleaning costs, and a portion of depreciation of equipment and fittings. If you own your home and use part of it as a place of business, you can claim a portion of things like rates, mortgage interest and other expenses, but there are capital gains tax implications when you sell your home.

KEEPING RECORDS FOR THE TAX OFFICE...

When keeping tax records you should keep and record EVERYTHING. This means all your daily expenses should be recorded and all your income should be written down.

Example Log that you need to keep for tax purposes including some examples of what you can claim....

Date	Details	Income	Expenses
15/10/07	Mathew	$400	-
16/10/07	Mark	$700	-
17/10/07	Luke	$700	-
21/10/07	John	$200	-
21/10/07	Rent	-	$3000
21/10/07	Advertising	-	$580
21/10/07	SEO / website	-	$465
Totals:		$2000	$4045
Calculated by subtracting total income from total expenses and is the total amount of money you end up with at the end of the week Weekly Net Income:	= $- 2045	$2000 -	$4045

Because you have come out with a negative number, this means you are in debt $2045. In other words, you didn’t make enough to cover your expenses this week. There’s always next week to make it back though J

YOUR LOG - HAVE A GO :)

Date

Details

Income

Expenses

Totals:

Calculated by subtracting total income from total expenses and is the total amount of money you end up with at the end of the week

Weekly Net Income:

DEALING WITH THE TAX OFFICE...

BOO HE SEES YOU! Your RIGHTS when dealing with a Tax Officer so use them!..

1. you have the right to have your tax agent, accountant or solicitor there with you at any meeting you may have with the Tax Office

2. You have the right to ask for and see the tax officers authorization / credentials if they drop in to see you in your work place

3. the tax officer can’t remove original records although they can take photocopy of any records you may have. This means you should hide all your records in the

4. workplace in case they drop in and see them lieing around and choose to photocopy them

5. if you are to be interviewed, you can expect they will give you ‘reasonable notice’ at a time convenient to you both for the interview to take place. This will give you the time to organize your accountant to be there

6. You can tape or record your interview with the Tax Officer

7. You do not have to sign the record of interview and you should only sign if you understand what your signing and have understood what happened in the interview

8. you must answer their questions although you may ask legal advice or consult your records before doing so

9. the Tax Officer just can’t walk through your premesis and talk to whoever they want including clients and other members or staff of workers who may be on premesis you can ask for all questions to be put in writing and that they give you ‘reasonable time’ to answer them

The Tax Officer's Rights when dealing with you!...

1. A tax audit can be done either in the tax office, in your place of work or in your home

2. The Tax Office is entitled to full access to your premesis, books and all documents so they are able to audit you

3. if you are being audited, you must supply the Tax Officer with ‘reasonable’ facilities and assistance (this means switch on the light for them if they ask you to) and you must assist them in locating all relevant documents.

WHAT THE ATO WEBSITE SAYS...

Here are the ATO's guidelines for those within the adult industry to help you with what you can claim & documentation required. It can be found here: http://www.ato.gov.au/businesses/content.asp?doc=/content/69324.htm

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Tax help for people working in the adult industry

Terms we use

When we say:

sole operator, we mean that you work for yourself, or contract your services to others, for example, as an escort, stripper or dancer
tax deduction, we mean money spent supporting your work, which can then be used to reduce your assessable income and therefore the amount of tax you pay.

What’s in this fact sheet?

This fact sheet provides information about a number of tax matters for sole operators in the adult industry. If you work from home, or as a contractor in bars, clubs, brothels or other premises, this information applies to you.

If you are a sole operator, you:

do not collect a wage
are unlikely to employ staff, and
are considered to carry on a business.

As a sole operator you pay the same income tax, and are basically entitled to the same deductions, as wage and salary earners.

Do I need to complete a tax return?

Yes. As a sole operator you must complete an income tax return to report your income and your tax deductions for each financial year. You can lodge your tax return on paper using TaxPack, by using our online lodgment service eTax; or through a tax agent.

What tax deductions can or can’t I claim?

You should keep receipts for all the work-related expenses you have claimed or intend to claim as a tax deduction.

What records do I need to keep?

You must keep records related to all income earned. You also need to keep records for any of the items you have claimed as tax deductions. All records need to be kept for five years. These will include records such as receipts, dockets, invoices, diaries, bank statements, deposit books and cheque butts.

Good business records will help you to manage your business, manage your tax obligations, make sound business decisions and make the best use of your accountant.

To help you in keeping your records, we have the following free tools and information available for you.

Record keeping for small business

Record keeping for small business (Nat 3029), is an information resource explaining what business records you need to keep. It can help you set up a good record keeping system on paper.

You can get a copy of the guide on our website at www.ato.gov.au or phone us on 13 28 66.

Record keeping evaluation tool

We also provide an online record keeping evaluation tool that can help you set up a record keeping system or evaluate existing record keeping systems.

The record keeping evaluation tool is available on our website at www.ato.gov.au

e-Record

e-Record is free record keeping software you can get from our website. It can replace your paper-based system, and you can use the data collected in e-Record if you lodge your activity statement online.

You can download e-Record from www.ato.gov.au/erecord or phone 1300 139 051 to have a CD-ROM sent to you.

Do I need an Australian Business Number?

All sole operators should have an Australian business number (ABN) to operate a business. The ABN is the number used by the Tax Office and other businesses to identify you as a taxpayer.

When providing services to other businesses, generally you must quote your ABN on your invoices to avoid having tax withheld from your payments.

Getting an ABN

You can register for an ABN:

electronically through the Australian Business Register at www.abr.gov.au
by using a paper application available from most newsagents or by phoning the Tax Office on 13 28 66, or
have your tax agent lodge your application.

Do I need to register for goods and services tax?

You must register for the goods and services tax (GST) if your projected turnover is greater than $50,000 in 12 months.

Should I be paying superannuation?

Sole operators are not required to contribute to a superannuation fund. However, you may wish to consider paying superannuation as a form of retirement savings. You can claim tax deductions for your contributions provided you are not treated as an employee for superannuation guarantee purposes. You need to contact your superannuation fund for more details about this.

For more information refer to:

Income tax and deductions for small business (NAT 10710)
Carrying on a business at or from your home (NAT 10709)
Record keeping for small business (NAT 3029)
ABN a great start for business (NAT 11306)
GST for small business (NAT 3014)
PAYG withholding for small business (NAT 8075)
Superannuation guarantee – a guide for employers (NAT 1987)
Choice of superannuation fund – guide for employers (NAT 13185)
Fringe benefits tax for small business (NAT 8164)

You can get these publications by visiting our website at www.ato.gov.au or phoning us on 1300 720 092.

More information

For more information, phone:

13 28 66 for general business enquiries or to arrange an advisory visit from a tax officer
13 10 20 for superannuation enquiries, or
13 28 61 for personal tax enquiries.

Our operators are discreet and will protect your privacy.

For more information online:

visit our website at www.ato.gov.au for general information and online taxation transactions
visit the Business Entry Point at www.business.gov.au for information about business tax matters, and transactions with government. You can also register for an ABN, GST and/or apply for a tax file number.

A registered tax agent can assist you in resolving any outstanding issues as well as completing your current obligations. For a list of registered tax agents, phone 13 28 66 or contact the Tax Agents’ Board in your state or territory.

If you do not speak English well and want to talk to a tax officer, phone the Translating and Interpreting Service on 13 14 50 for help with your call.

If you have a hearing or speech impairment and have access to appropriate TTY or modem equipment, phone 13 36 77. If you do not have access to TTY or modem equipment, phone the Speech to Speech Relay Service on 1300 555 727.

Our commitment to you

We are committed to providing you with advice and information you can rely on.

We make every effort to ensure that our advice and information is correct. If you follow advice in this publication and it turns out to be incorrect, or it is misleading and you make a mistake as a result, we must still apply the law correctly. If that means you owe us money, we must ask you to pay it. However, we will not charge you a penalty or interest if you acted reasonably and in good faith.

If you make an honest mistake when you try to follow our advice and you owe us money as a result, we will not charge you a penalty. However, we will ask you to pay the money, and we may also charge you interest.

If correcting the mistake means we owe you money, we will pay it to you. We will also pay you any interest you are entitled to. You are protected under GST law if you have acted on any GST advice in this publication. If you have relied on GST advice in this publication and that advice later changes, you will not have to pay any extra GST for the period up to the date of the change. Similarly, you will not have to pay any penalty or interest.

If you feel this publication does not fully cover your circumstances, please seek help from the Tax Office or a professional adviser.

The information in this publication is current at May 2006.

We regularly revise our publications to take account of any changes to the law, so make sure that you have the latest information. If you are unsure, you can check for a more recent version on our website at www.ato.gov.au or contact us.

Last Modified: Tuesday, 23 May 2006

USEFUL LINKS AND CONTACTS...

Australian Taxation Office http://www.ato.gov.au:80/businesses/content.asp?doc=/content/69324.htm link to section of site dealing with sex industry

For Peer reviewed and passed sensational sex worker friendly accountant in Sydney's CBD please contact Lucy Blake (lucy@lucy-blake.com)

Scarlet Alliance www.scarletalliance.org.au Peak body for all the sex worker orgs in Australia (good website)

written by Sydney Escort Lucy Blake; site design and maintenance by Lucy Blake; Copyright Lucy Blake www.lucy-blake.com 2009 - 2011

Elite Sydney Escort Lucy Blake, independent Sydney escort, Sydney escort companion for discerning gentlemen.

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