Statistics show that there has been huge growth in the number of people working as tutors and private teachers over the past five years and further growth is expected over the next five years. As of 2018, there were an estimated 39,700 tutors in Australia, and this number is expected to grow to 41,300 by 2023. JobOutlook estimates that around 30,000 jobs for teachers who wish to teach privately will become available over the next 5 years (that's around 6,000 new jobs per year!)

The demand for tutors is already high and the industry is only growing. This means there are more and more tutors offering their skills, but with a diverse range of experiences and qualifications. Because of the increasing popularity of home tutoring, income from private tuition is being monitored ever more closely by the Australian Taxation Office (ATO).

When you take on private tutor jobs, you are considered a self-employed sole trader. You may also be receiving a personal services income if over 50% of your work-related income is for your skills, efforts or expertise (rather than people buying goods from you). No matter your exact classification, you have a duty to ensure you are complying with Australian tax laws and reporting your earnings to the ATO in a timely fashion. This means doing your tax return, which can be done online.

Make sure you record your earnings from the moment you take on your first tutoring jobs Sydney. If you don't record and report all your income, you could face a fine or penalty from the ATO. To be safe, make sure you keep clear income reports.

It doesn't have to be confusing or complicated to report your income, in fact the process is quite straightforward. Here we've collected all our best taxation tips, and we've also included frequently asked questions for new tutors and a simple guide to recording your earnings and filing a tax return.

How can I register to pay taxes on my tutoring jobs?

The first important step to reporting your income from private tuition is finding or applying for your Tax File Number (TFN). To work in Australia, having a TFN is not a legal requirement, but if you don't have one you will pay more tax. The TFN also allows you to lodge your tax returns electronically and apply for an Australian Business Number (ABN), which is crucial for setting up your own tutoring business. You can find out more about the TFN here.

Once you have a TFN, the second important step is registering for an Australian Business Number (ABN). This is a unique 11-digit number that identifies your business to the Australia government and taxation office. It is important to print your ABN on all of your invoices for the client's reference.

Running a tutoring business can be simple as long as you follow the standards and procedures
To create your own tutoring company, you'll first need an Australian Business Number (ABN)
Source: Upsplash

The Australian financial year runs from the 1st of July to the 31st of June every year, and as a self-employed tutor you will need to complete a tax return for the previous financial year between the 1st of July and the 31st of October. As long as you have a TFN, it is possible to do this online. You must report your private tutoring income even if you are also employed through an agency, as this will change your taxation rate.

As of 2019, the current tax-free threshold is $18,200 per annum. This is how much money you can earn in total per year that is not taxed. If you earn under this amount, any tax you pay will be returned to you in full through your tax return. 

It is extremely important that you register for a tax file number, and ABN and submit your tax return by October 31st of your first year of working. Otherwise, you may be investigated by the Australian Taxation Office and could even face a fine.

If you are taking on jobs in education or tutoring through a registered agency or employer, the tax may be taken out of your pay as you receive it. This is known as Pay As You Go withholding, and with this system, you do not need to do any taxation paperwork.

However, if you are self-employed, you can also apply to make regular Pay As You Go installments through the myGov website. With this system, you make smaller payments towards your taxes throughout the financial year, rather than being slugged with a larger tax bill all at once. You can find out more about how to set up Pay As You Go installments here.

However, many tutor agencies, including us here at Superprof, leave all payment to be organised solely between the student and the tutor. 

In these cases, all income and payment records are your duty to keep track of, and you'll need to document all your earnings for the ATO.

How Do I Lodge a Tax Return?

There are three main ways to lodge a tax return: through a registered tax agent, by paper or online through the government's website, myTax. myTax is by far the cheapest and quickest option, however, if you have any issues or uncertainties relating to your tax return, you should book an appointment with a registered tax agent.

However you choose to lodge your tax return, it's important that you have on hand all the crucial information on your business and earnings. From the moment you take on your first tutoring jobsyou need to keep records of your income streams and stay on top of any paperwork. This will make the whole process as painless as possible.

You will need the following documentation for your tax return:

  • A record of the income and expenses from your private tutoring business
  • If you also work through a tutoring agency or school, your PAYG earnings
  • Any records of "other incomes" such as investments, savings, pensions or scholarships
  • Bank statements for the previous financial year

Once you've got yourself set up and are ready to begin tutoring, make sure you check out our tips on motivating your students to reach their full potential.

How should I Record my Income from my Tutor Jobs?

How should a home tutor record their earnings?
Ensure you keep detailed, clear records of your earnings. Source: Visualhunt

As a self-employed tutor, it is your legal responsibility to keep detailed and accurate records of your earnings. This is so the ATO is able to correctly calculate how much to tax your income. Keeping good records helps to keep your tutoring business organised and will ensure your tax return is lodged as smoothly as possible. .

In order to organise your records, you might want to separate your income into allowable business expenditure and income. Also, make sure you date everything!

Looking for more work? Let us hook you up with tutoring jobs in Melbourne.

Everything you earn must be recorded. This could be done in a notebook, or an Excel spreadsheet or Word document. It is also a good idea to log your expenses, along with any receipts. Expenses for your tutoring business could include advertising, travel, stationery, books, insurance and event rent if you use part of your home as a tutoring space.

Keeping detailed income and expenses logs that are clearly dated will make sure you stay up-to-date with your business documentation and will aid you in lodging your tax return quickly and easily. 

Ensure anything you record is accurate and honest, and don't forget to triple-check all the info you put into your logs to guard against mistakes or typos.

We recommend keeping track of your expenses as well, since these can be deducted from your taxable profit and may reduce your overall tax bill.

Feeling prepared to register for taxation and launch your tutoring business? Start your search for online teaching jobs today.

Which Taxes Do I Pay On The Income from my Tutoring Jobs?

Under Australian tax law, your "taxable income" is the difference between your assessable income and the allowable deductions. If you are self-employed, you will be taxed at the individual Income Tax rate (rather than the company rate), which can be anywhere from 0% (for people who earn under $18,200 per annum) to 45%, depending on how much money you make and therefore which tax bracket you fall into. There is also a Medicare Levy of 2%. You may also need to pay Goods and Services Tax (GST) if you earn over a certain amount. If you want an estimate of how much you will be taxed on the income from your tutoring jobs, you can utilise the Australian Government's online tax calculator.

What taxes do private tutors pay?
The amount of tax you pay depends on how much you earn. Source: Visualhunt

Many private tutors also take on jobs for teachers through other businesses. If your tutoring income is in addition to employment through another registered business, you need to report your income from both jobs. Since you are receiving income from multiple jobs, this will affect your overall tax bill.

Many private tutors are also taking on jobs in education alongside their own studies. This usually means you will not be earning quite as much as a full-time tutor. In addition, if you are receiving a Youth Allowance, Austudy or ABStudy for the duration of your studies, you will need to report your tutoring income to Centrelink and this will affect your payment rate.

Do I need to pay GST? The GST is a tax of 10% on most goods and services exchanged within Australia. Sole traders (ie. self-employed tutors like you!) do not generally need to pay this unless they earn over $75,000 per financial year. If you do earn over this amount, it might be a good idea to include the 10% GST cost in your invoices to your clients.

Now you've got a clearer idea of how to record and report your tutoring income, why not look into obtaining a Working With Children Check, the legalities to consider when undertaking home tutoring and which insurance suits your tutoring business.

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Erin is an Australian musician, writer and francophile living in France.