The complete guide to gig worker tax

Becoming a gig worker or someone who works independently can be a great way to earn money on your own terms. Various gig platforms are popular in Australia, such as Airtasker, Uber, and HiPages, and they can help you find clients and work. You'll need to register for an Australian Business Number (ABN) when doing gig work. Unlike being a regular employee, you'll need to manage your finances by keeping track of your earnings, setting aside money for taxes, and planning any downtime periods.

The tax rate for gig workers in Australia is the same as for traditional employees. Your income is subject to the progressive tax system, which means that the more you earn, the higher your marginal tax rate will be. The tax rates for Australian self-employed sole traders are available on the ATO website.

To calculate your tax as a gig worker, you will need to keep track of your income and expenses throughout the year. For example, if you earn $60,000 for the financial year and have eligible expenditures of $10,000, you'll pay a total tax bill of $6,716.81. This is how you would calculate it:

Total Income – Eligible Expenses: $60,000 - $10,000 = $50,000.

You then take this $50,000 and apply the sole trader tax rate:  

• 0 – $18,200 = No tax  
• $18,201 – $45,000 - 19 cents for each $1 over $18,200 = $5,091.81  
• $45,001 – $50,000 - 32.5 cents for each $1 over $45,000 = $1,625.00  
• $5,091.81 + $1,625.00 = $6,716.81

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When doing gig work, it's important to remember that your pay will include tax. When you earn income from a regular salaried job, the tax is not included when your pay cheque is sent. Because the tax is paid to you, you'll need to keep an eye on your expected tax bill and keep funds set aside for the end of the financial year.

As a gig worker, you will be eligible for deductions based on expenses you incurred doing your job. Things like uniforms, fuel and insurance can be deducted from your income. You are not able to claim costs that you generated outside of doing gig work. For example, if you purchased movie tickets, you can't claim this.

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"As a gig worker, you will be eligible for deductions based on expenses you incurred doing your job. Things like uniforms, fuel and insurance can be deducted from your income."

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There are various tax tools available for gig workers in Australia. One of the most popular is Thriday, an app that helps gig workers keep track of their income and expenses throughout the year and calculates their estimated tax liability. With Thriday, there is no guesswork, as your current and predicted end-of-financial-year tax positions are always visible. You can also easily track expenses for your business and scan receipts. Thriday also offers free online services that provide information, resources, and tools for small businesses, focusing on gig workers.

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Gig Worker FAQs

What is a gig worker?

A gig worker is a self-employed individual who earns a living by performing short-term contracts or freelance work for businesses or individuals.

What are some examples of gig work?

Examples of gig work include driving for a ride-sharing service like Uber, delivering food for Uber Eats, freelance writing, graphic design, or photography, and providing home services like cleaning or yard work.

Do gig workers need to pay taxes in Australia?

Yes, gig workers are considered self-employed and are responsible for paying their own taxes. This means they must track their income and expenses and lodge a tax return each year.

How do gig workers manage their finances?

Gig workers can manage their finances using accounting software like Thriday to track income and expenses. They may also want to set aside a portion of their income for taxes and other expenses.

Are gig workers entitled to superannuation?

Gig workers are generally not entitled to superannuation, as they are considered self-employed. However, there are some exceptions, such as if they are engaged as an employee under a contract or operating as part of a larger business.

What are some challenges of being a gig worker?

Some challenges of being a gig worker include the lack of job security, uncertainty around income, and the need to manage finances and taxes independently.

How can gig workers protect themselves financially?

Gig workers can protect themselves financially by setting aside a portion of their income for taxes and other expenses, investing in insurance or liability coverage, and building an emergency fund. They may also want to consider diversifying their income streams to reduce their dependence on any one source of income.

Being a gig worker in Australia can come with unique tax implications, and it's essential to understand your tax obligations and to keep track of your income and expenses to ensure you are paying the correct amount of tax. The tax rate for gig workers is the same as for traditional employees, but taxation is not deducted when you are paid, so you'll need to set aside funds for the end of the financial year. Tax tools like Thriday make it easy for gig workers to navigate the tax system and ensure they pay the correct amount of tax on time.