Personal or Business... Unsure?

[Stupid Boy]

Hi All,

Just had a conversation with a younger sibling who has recently purchased a digger for some Saturday work, however this has taken off a little more than he expected... he was initally paid via cash but has now taken on work and is going to be paid by business cheque...

I realise he has been in the wrong for the past but does anyone have an idea of how best how he should treat this situation going forward...

Would it be best for him to declare this through his personal taxes which would affect his mon-fri tax bracket quite significantly with the possibility of him earning 5-6k over the next four months ???

Any feedback appreciated..

SB

 

[John Rambo]

How can earning more money cost you money? He declares the extra income and either pays tax at 20% or 41% on the income depending on his situation.

 

[rmelly]

Depending on what he currently makes versus the tax bands, he could end up paying higher rate on some of his wages, or some or all of overtime or bonuses because of it if applicable.

Try playing around with this:

 

[Complainer]

Remember that his tax liability is based on his profit, not his income. He can deduct paymets for the digger.

 

[rmelly]

Maybe, but without any further details we don't know what impact it will have .