[Guide] Australian Tax for authors.

[TimothyEllis]

A few things about author tax for Australians.

1. Amazon deduct tax out of your royalty amount, at the time of payment. 30% if you haven't submitted your Australian tax details, 5% if you have. The 5% is deducted at payment time and is gone.


2. All you can do is claim tax already paid at tax time, using the yearly US$ rate for conversion, published on the ATO website. If your actual tax bill is less than that, you lose the excess. They dont do refunds of US tax. But if you have the income, the US tax decreases your Australian tax.


3. Any income from being an Author is taxed in Australia differently. If you apply to be classified as 24Z Special Professional Income, a completely different method of calculating tax is used, which should lower how much tax you pay, but it's calculated over a 5 year period. Filling the tax out on the online site is a real b*tch because you have to put 2 different sets of numbers in 2 places, but it can be done online. But first you have to ring the ATO and find out how to write to them to apply for it. It only applies on your author income, but it can keep you from bracket creeping. I did this and received a very healthy refund on the previous 2 years tax.

If you are earning well on book sales, you should be in 24Z. Its a process. It took 2 attempts a sending them the letter, and several hours on the phone to the ATO (they rang me), but it was worth it.

You do not need to be registered for GST or have an ABN. GST applies only if you sell from your own website, or from events. And it cuts in somewhere around the $80k mark, so very few authors will need to worry about GST registration.

[Simon Haynes]

I had to explain the 24Z to my previous accountant because they'd never heard of it. My current accountant is about to learn of it, if he doesn't already know!

One thing about GST - I sell apps on the apple store, and for Australian sales they insist you are registered for GST before they'll pay up. In response, I blocked my apps from Australian users. (Even an ABN isn't enough. It looks like they forward the GST they've collected, and expect you to remit it to the ATO.)

This is the only reason I don't publish my books on iTunes directly. There is no way in hell I'm doing quarterly BAS statements for maybe a hundred dollars or so of royalty, and I'm pretty sure the ATO will laugh down the phone at me if I try and register for GST with that kind of annual turnover.

There has to be a tipping point, and to me it's easier to just publish through Smashwords and let them deal with it.

Having said that, I'm about to publish my stuff direct through B&N instead of relying on Smashwords.

(All of the above is supposition and personal experience. I'm not an accountant or a GST expert, so I strongly advise people to make their own enquiries. I would love to know if I'm wrong, particularly where iTunes is concerned.)

[Lee Carlon]

After a bit of back and forth with Apple about the GST issue, I managed to get this reply from somebody in their finance team:

The Australia GST requirement would not have any impact on your ability to publish directly with Apple in other countries.  If you expect your annual earnings in Australia to be less than $7,500 AUD (including GST), we do have an alternative process if you choose to not provide GST registration.  Basically, we review accounts without Australia GST registration on an annual basis.  If the earnings are less than $7,500, we reverse the GST and issue payment.  The only downside is that you will be paid for your Australia earnings once per year instead of monthly.  Hope this information helps!

[Simon Haynes]

After a bit of back and forth with Apple about the GST issue, I managed to get this reply from somebody in their finance team:

The Australia GST requirement would not have any impact on your ability to publish directly with Apple in other countries.  If you expect your annual earnings in Australia to be less than $7,500 AUD (including GST), we do have an alternative process if you choose to not provide GST registration.  Basically, we review accounts without Australia GST registration on an annual basis.  If the earnings are less than $7,500, we reverse the GST and issue payment.  The only downside is that you will be paid for your Australia earnings once per year instead of monthly.  Hope this information helps!

That is fantastic news!  If they let you know how to apply for this, can you post here?

I have a lot of yWriter IOS customers who will be over the moon, and I'd love to publish my ebooks direct to apple books as well.

Cheers
Simon

[Lee Carlon]

After a bit of back and forth with Apple about the GST issue, I managed to get this reply from somebody in their finance team:

The Australia GST requirement would not have any impact on your ability to publish directly with Apple in other countries.  If you expect your annual earnings in Australia to be less than $7,500 AUD (including GST), we do have an alternative process if you choose to not provide GST registration.  Basically, we review accounts without Australia GST registration on an annual basis.  If the earnings are less than $7,500, we reverse the GST and issue payment.  The only downside is that you will be paid for your Australia earnings once per year instead of monthly.  Hope this information helps!

That is fantastic news!  If they let you know how to apply for this, can you post here?

I have a lot of yWriter IOS customers who will be over the moon, and I'd love to publish my ebooks direct to apple books as well.

Cheers
Simon

This was my follow up question in the email thread:

Does that annual review process for Australian publishers without GST registration kick in automatically or does it need to be activated manually?

and this is the answer I got (note the conversation took place in September 2017, and I didn't publish my books with them until this month so I haven't seen the process in action):

It is a manual process we perform once a year (last done in May 2017).  You will receive an email notification when the process is completed next year.

And of course, I'm not an accountant and I do recommend contacting apple directly to verify this, even if just so you have it on record and can refer back to it if you need to later

[Simon Haynes]

I just finished setting up my Apple Books account, and on the tax page there's a tab for Aussie publishers. It says an ABN and a GST rego must be provided before they'll sell books in Australia, hence my question. I can leave that section blank, just wondering if that means they will sell books here?

(With my apps, they started sending me a monthly email saying they're going to hold my payment for aussie sales and I need to send $x to the ATO for GST.)

I realise you're not giving tax advice, I just want to follow in your footsteps because that's good enough for me.

[Lee Carlon]

I realise you're not giving tax advice, I just want to follow in your footsteps because that's good enough for me.

Of course I posted that disclaimer as much for anybody else who comes along and reads it as anything else.

I actually excluded Australia when I set up my books earlier this week, but having gone back through my emails to pull this out, I'm going to enable Australian distribution and see how it goes. I'm always a bit wary when it comes to official things like tax, but the emails were pretty clear so it should be fine.

I hope it solves the yWriter iOS issue for your Australian customers!

[TimothyEllis]

I just finished setting up my Apple Books account, and on the tax page there's a tab for Aussie publishers. It says an ABN and a GST rego must be provided before they'll sell books in Australia,

This is really stupid, and shows Apple haven't bothered talking to the ATO.

You dont need GST registration if you don't actually sell hard books off a table somewhere, or wholesale to book stores.

Even if you do, you don't need GST registration until your gross sales cross a threshold which is around $80,000 a year.

And if you dont need GST, you also dont need an ABN.

Nobody outside of Australia realizes this. Facebook are actually working GST illegally. All of them assume our GST is just another VAT, and its not, having very distinct rules attached to how it operates.

[Simon Haynes]

I'll definitely look into it.

I just wondered whether I have to take any extra steps to activate the 7.5k threshold.

Also, I don't see how to add a book, but I seem to recall this has to be done using a mac. (Luckily I have a mac mini I bought to publish apps to the itunes store ...)

[TimothyEllis]

I just wondered whether I have to take any extra steps to activate the 7.5k threshold.

Where did they even get a 7.5 threshold from? Makes no sense at all.

Someone really needs to ring the ATO, tell them what Apple are doing and ask for advice.

[Lee Carlon]

I'll definitely look into it.

I just wondered whether I have to take any extra steps to activate the 7.5k threshold.

Also, I don't see how to add a book, but I seem to recall this has to be done using a mac. (Luckily I have a mac mini I bought to publish apps to the itunes store ...)

You’ll need to download iTunes producer and then upload the books through that. From experience, I recommend saving the file producer creates (not the ebooks but the one with all the book details) in a sensible place. I moved computers and don’t have access to the file for the first book I uploaded, and i’m not sure how to make changes.

[Astrid Torquay]

1. Amazon deduct tax out of your royalty amount, at the time of payment. 30% if you haven't submitted your Australian tax details, 5% if you have. The 5% is deducted at payment time and is gone.

2. All you can do is claim tax already paid at tax time, using the yearly US$ rate for conversion, published on the ATO website. If your actual tax bill is less than that, you lose the excess. They dont do refunds of US tax. But if you have the income, the US tax decreases your Australian tax.

How do you prove to the ATO that Amazon has taken its 5%? Does Amazon report the deduction in each monthly payment statement?* Or is there an annual report?

(*Clearly, I have no idea about this, as I have not received a payment yet; I published my first book in October, so my first payment will be coming this month.)

[TimothyEllis]

How do you prove to the ATO that Amazon has taken its 5%? Does Amazon report the deduction in each monthly payment statement?* Or is there an annual report?

(*Clearly, I have no idea about this, as I have not received a payment yet; I published my first book in October, so my first payment will be coming this month.)

On the KDP dashboard, hit the payments tab, and all your payments are listed. Hit the + sign on the left of each payment, and it expands out to show all details, including tax paid.

If the ATO ever ask for proof, which they wont unless you get audited, you expand out all the US, Brazil, and India payments, and print it for them. Or do each store as a specific search, expand them, and print.

[Astrid Torquay]

Thanks. I'll look out for it.

Too many past run-ins with the ATO (often where they made a mistake and blamed me) and now I am diligent about keeping records every month. My standing instruction to my accountant is "keep the ATO away from me".

[TimothyEllis]

Thanks. I'll look out for it.

Too many past run-ins with the ATO (often where they made a mistake and blamed me) and now I am diligent about keeping records every month. My standing instruction to my accountant is "keep the ATO away from me".

Each month after the payments are finalized (usually about the 4th or 5th), expand that month, and print for the accountant.

[The Bass Bagwhan]

A lot of US folks here say they don't sell direct from their website (via whatever means they choose) because satisfying the various sales tax demands of something like 35 different US states is a nightmare.
How are Australians affected by this system? Or are we just "covered" by the tax treaties between the US and Oz?