Questions about declaring income received from overseas clients
Thread poster: Sonia Kim

Sonia Kim
Australia
New user
Oct 13

Hello all,

I have recently started to work as a translator but for now, all my clients are outside of Australia and I receive payments in USD remitted to a bank account back in my home country. Having looked through previous posts, I understand I have to apply for an ABN and declare income as a sole trader.

In my case, should this be declared as foreign income? I found several categories under foreign income, such as pension and annuities, rental income, foreign employment etc, but foreign employment seems to apply to those working outside of Australia. As I work at home in Australia, should I choose the "other foreign income" category and write "translation" in the description? Or is this not necessary and I should just convert the payments received into AUD and declare the total amount without specifying it as foreign income?

I have talked to my accountant, but she does not seem to have a clear idea about this.

Would anything change if I were to have payments transferred to an Australian bank account?

I have never had to file tax returns of this sort before and would greatly appreciate any input.

Thanks in advance,

Sonia


 

Dan Lucas  Identity Verified
United Kingdom
Local time: 20:14
Member (2014)
Japanese to English
You may need a better, or more engaged, accountant Oct 13

Sonia Kim wrote:
I have talked to my accountant, but she does not seem to have a clear idea about this.

I don't know the answer in your specific case, but your accountant's job is to provide certainty or, if certainty is not possible, a well-argued opinion.

If she doesn't know right now, she should get out there and research it so that she can come up with something in a day or two. She can discuss with her industry association, her peers, on specialist forums, etc.

If she cannot or will not do that, you should find somebody else. What is she for if not this?

Regards,
Dan


Daria Bontch-Osmolovskaia
Michele Fauble
Kuochoe Nikoi
 

Daria Bontch-Osmolovskaia
Australia
Local time: 05:14
English
+ ...
get a better accountant! Oct 13

If you after advice- you do need to find a better accountant. Definitely not a "tax agent", they are useless. Find someone who is capable of researching this stuff for him/herself, and preferably who is used to working with self-employed people, and knows what deductions you can claim and how to deal with a home office. Otherwise, what are you paying her for?

Yes, you absolutely must have an ABN and be registered as a sole trader! Otherwise ATO will come down on you like a tonne of bricks, and fine you. Lots.

In my case, I chose to convert all my non-Australian income into AUD, and declare it all as my Australian income. So I record the amounts on the invoices (in USD, EUR, GBP, whatever), and then - when it actually hits my bank account, or I transfer the payment from Paypal into my Australian bank account - I record that precise amount. Then I pay taxes on everything.

However, if you are planning to always keep your cash in a different country's bank account, and never use it in Australia, that's another story. You don't necessarily have to declare it, but you cannot transfer it to an Australian bank account, or use it on Australian soil. Speak to a good accountant.

You must keep all your paperwork & receipts for 7 years.

P.S. My accountant got queried by the ATO about my income a few years ago. They used an average currency conversion rate to calculate my income, whereas I recorded the actual (what the bank did on the day). The difference for the year was about $800, and they wanted me to pay taxes on that. I was very glad that I kept meticulous records, in all currencies, and my bank statements too! I was able to balance it to a cent, and didn't have to pay anything (apart from my accountant's bill...)


[Edited at 2018-10-13 07:36 GMT]


 

Vanda Nissen  Identity Verified
Australia
Local time: 05:14
Member (2008)
English to Russian
+ ...
ABN Oct 13

Hi Sonia,

You certainly need to apply for ABN. It would be better, of course, if your clients can pay directly into your Australian bank account. However, it is not necessary. You will need to find a good accountant though. They can also help you with deductions.


 

Sheila Wilson  Identity Verified
Spain
Local time: 20:14
Member (2007)
English
+ ...
Your accountant MUST know Oct 13

Sonia Kim wrote:
I have talked to my accountant, but she does not seem to have a clear idea about this.

Some accountants only want to deal with simple cases and yours is not particlarly simple. You need to find yourself a knowledgeable accountant.


I'm not any sort of accountant and I know nothing about Australia, so all I can do is tell you what applies to me. I live in Spain but I rarely have Spanish clients.

Would anything change if I were to have payments transferred to an Australian bank account?

If my clients pay in EUR it comes into my ES bank account; GBP payments go into my UK bank account; USD payments go into my PayPal account and get spent from there to avoid conversion losses. All payments get accounted for in exactly the same way, after converting sums to EUR if necessary at a rate and date detetmined by the tax authorities.

In my case, should this be declared as foreign income?

I very much doubt it. The income is (will be once you're registered as a sole trader in AUS) generated from your business there, not from abroad. I declare mine as self-employed income in Spain.

Find a competent AUS accountant and you'll probably be told that it works the same way for you. But you really do need expert advice.


Michele Fauble
 

Sonia Kim
Australia
New user
TOPIC STARTER
Thanks for your replies Oct 13

I was hoping to do this on my own after obtaining some information from those of you in a similar situation,
but I guess I definitely have to seek professional help.

Thank you all for taking the time to read and reply to my post!


 

Sonia Kim
Australia
New user
TOPIC STARTER
Thanks, Daria and Sheila especially, for your detailed replies. Oct 13

Wow, I didn't realize there were so many translators dealing with multiple currencies. I found this site only yesterday and it's been very helpful. At least I now have some basic information to know what questions I should ask in seeking a suitable accountant.

 


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