For those preparing their own tax return using myTax and are comfortable with doing so, note that there isn’t a requirement to use an accountant or a tax agent. However, it doesn’t hurt to verify with them that everything is done correctly. For those new bands, seeing an accountant who fully knows the music industry is greatly suggested. This makes sure that the deductions available are maximized during tax time.
Good record-keeping is very important for many reasons. First, most of the accountants charge per hour. When the information is organized, it will take lesser time for them to do the work, and the charge is lesser too. This also means being in control of things. This results to lodging taxes on time.
The record-keeping requirements vary per business and structure. For tax returns, a summary is great. Still, the original invoices are needed for claims and should be hold on to for at least 5 years especially when audits are done.
The summary should include the invoice date, invoice description, income or expense category and amount.
A bookkeeper is helpful for someone not interested in doing this themselves. They will keep track of the income and expenses and keep it in an orderly format. They also prepare and lodge those quarterly Business Activity Statement as well as maintain the payroll and work together with the accountant.
The ATO launched their application that has features like a log book and the storing and also filing of receipts for expenses.
Income and deductions
These are the common examples in the music industry.
- Live performance
- Advances and royalties
- Synch licensing
- CD or vinyl sales during gigs or online
There are many deductions. Here are a few examples:
- Stage clothes or costumes
- General business expenses
- Accounting fees
- Bookkeeping fees
- Registration fees, trademark, etc.
- Workers compensation
- Income protection
- Public liability
- Management commission
- Recording costs
- Studio hire
- Rehearsal room hire
- Tour costs
- Travel costs
People start a band, write and perform music since they love it. However, they don’t love the accounting or tax. This is part of belonging in the band. Meeting the tax obligations every year is important and when it happens that an audit is done, it is also helpful be prepared by getting an audit shield to avoid the expenses that can result from the tax audit.