Australian tax question EXCITING. Not.

February 26, 2008 5:55 PM

Any Australian mefites out there with tax accounting knowledge for film/tv workers? I am so confused about this "income averaging" thing everyone's talking about. I get the theory of why and how income averaging works, but I'm a bit confused about who is eligible, as I've been hearing conflicting stories...

Apparently, income averaging is available to people who work in the film/tv industry and who are "special professionals" - writers, performers, production associates, that sort of thing - whose incomes fluctuate year to year. My accountant tells me that you need to be operating with an ABN in order to be eligible, not PAYG, which is what I've been doing.

I have a several colleagues who are doing income averaging who are in the same job as me (film editing) and work under the PAYG system. How? Do they have dodgy accountants or is mine just extremely conservative/doesn't know what he's talking about? I just don't see the difference between being a PAYG employee or a freelancer, you're still being booked for short term projects, the job security is just as precarious and the income fluctuates just as wildly.

Do I need to find another accountant? Anyone know a know good one in Sydney?

posted by mooza to Work & Money (4 answers total)

I've got a friend who works at the ABC. I'll forward this on to her and see if she can help out...
posted by web-goddess at 6:13 PM on February 26, 2008

Response by poster: Thanks web-goddess. I should clarify - I realise many PAYG employees are permanent, but I work PAYG on productions that never last longer than 6 months, hence no job security.
posted by mooza at 6:25 PM on February 26, 2008

Best answer: She's replied! Here's her answer:

As far as I am aware you don't need an ABN to do the averaging income
thing. I work in the art department for the past 16 years and
currently work on contract at the ABC, having freelanced for most of
this time. I have been payg and use my ABN for the small and not so
small jobs I do mainly on commercials. I looked into becoming a
company but it is not worth it on my income, and as payg you get all
of the fringes - super, holiday pay, sick pay insurance,etc.

I asked my accountant this very question a few years ago and he said
as my income was quite consistent, apart from the year I asked which
was a bad year, it was not worth it.

If you really have swings in your income then it is worth it. As far
as I understand they average out your income over the allotted time
and then charge you in installments. But I would get current advice
as these things do change.

Best thing is to get an accountant with experience in the area of the
arts and in particular your area. Ask around your colleagues and
peers especially if they have a good accountant who specialise in
your area - acting, performing, design or technicians, and ask how
much they charge - otherwise you could be in for a shock. I am on
my fourth accountant so far over the course of my work history. I
tend to do my tax like a petty cash submission and hand it in - it
usually cost between 300-400 each year. If you are in my 'area' I am
happy to forward a few names I know - one in the city and one in the
eastern suburbs.

I would also strongly recommend income protection insurance - as
although I have never used mine a friend was covered for nearly 6
months when she got this really severe ear problem - dizziness etc,
and couldn't work. It doesn't cover you if the job falls over, eg
the falling tree, or you have no work but if you get sick - whether
you are working or not - when you lose your capacity to work.

posted by web-goddess at 10:22 PM on February 26, 2008

I should add: If you want her recommendations for accountants, just MeFi mail me your email address and I'll pass it on.
posted by web-goddess at 10:25 PM on February 26, 2008