The money you earn from providing services of any kind for a fee needs to be declared in your tax return.
This applies even if this income is to supplement your income from a job or business activities.
Claiming business expenses
You can claim deductions for expenses that directly relate to earning your personal services income.
Some common examples of expenses from offering your services include:
- travel expenses
- repairs, maintenance and replacement of assets
- home office expenses.
Some service fees or commission charged by a personal service online marketplace may be claimed as a deduction in full, depending on the nature of the fees and charges.
When you provide personal services, your expenses can sometimes be for both income-earning use and for private use. You can only claim a deduction for the income-earning part of the expense. You need to work out the amount of income-earning use and then use this amount to work out how much of your expense you can claim.
To claim a deduction for personal services expenses:
- you must have spent the money yourself and have not been reimbursed
- it must relate directly to the income earned from providing your services
- you must have records to support these claims.
Using your home for your business
Working out which part of an expense is for business
When you claim the income-earning use part of an expense as a deduction, you need to be able to show how you calculated the amount.
Common ways to show how you split the expenses include:
- keeping diary entries of specific usage throughout the year
- claiming expenses from an itemised bill.
Filing your income tax return
If you earn income from providing personal services through an online marketplace, you need to include this income and the deductions in your income tax return.
Income tax returns are filed annually, usually covering the period 1 April to 31 March.
Individual income tax return - IR3
Record keeping
As well as the usual records, you will need to keep records such as:
- statements showing your income from the online marketplace you are using
- receipts of any expenses you want to claim deductions for.
Records for business expenses can be kept in hard copy of electronically. All records must be kept for 7 years after filing your income tax return.