Anyone working in the sex industry in NSW may be contacted by the Australian Tax Office (ATO)—by telephone or in person. The ATO most likely will contact you at your workplace, and may use your advertising to find you. They may write to you at the address you give them and this may cause problems at home if people read, or illegally open, your mail. So plan ahead to protect your privacy, and sort out your tax contact details before you get that call or visit.
If someone from the ATO visits you:
You must respond if the ATO write to you at the address you have given, otherwise this may result in stronger compliance action from the ATO.
If someone from the ATO contacts you by phone:
NOTE: You can first verify whether someone is a genuine ATO officer by calling in with their name to the ATO’s general line on 13 28 69.
The ATO can ask for your name, address and date of birth in order to check your tax records. Under the law, you need to provide them with this information.
An acceptable alternative is to provide them with contact details of your accountant or tax agent, or to give your ABN if you have one.
The ATO also has the authority to enter premises to gain access to records such as shift records, job sheets and banking records.
You must keep your own records of your income and work-related costs so you can make a Statutory Declaration to the ATO of your income, or submit your Income Tax Return.
If you cannot provide records of your earnings you risk having the ATO estimate your income, after which you will be asked to pay any due tax.
All records need to be kept for five years. You do not need to send them to the ATO, but you must keep them as proof in case you are audited (they ask to check your records). Evidence of your costs might include:
if you intend to claim work-related expenses as tax deductions, keep receipts (now called ‘invoices’ or ‘tax invoices’) for those items or services, including any shift fees or costs for working at a brothel or parlour.
Different tax rules apply to employees, sub-contractors and sole traders. Although your employer might call you a sole trader or sub-contractor, you need to look at how your work is done to manage your tax responsibilities.
If you are an employee for tax purposes, your employer must pay your Pay As You Go (or PAYG) income tax and other payments such as superannuation.
But if you are a sole trader for tax purposes, you must pay your own tax on your income, and possibly GST if you earn more than $75,000 each year.
Whether you are classed as an ‘employee’ or ‘sole trader’, the brothel or parlour must give you appropriate records for your personal tax purposes.
When making a tax return you can call yourself an entertainer or performing artist. These categories allow for some of the same tax deductible expenses, such as costumes, make-up and similar things.