How one bad tax return changed my perspective on money forever 


I was a terrible bookkeeper so you don’t have to be. 

*For legal reasons, this is NOT financial advice. I am the last person to be giving any of that as you will soon come to realise. Alas, I do vow to make this as understandable and informative as possible. My DMs are always open if you have any off-the-record qs also. 

Remind me why I became a freelancer? Why am I doing this with my life? Have I made a huge mistake? I should definitely go and find a full-time nine-to-five job effective immediately. I am a fool. 

This is the paroxysm of panic that overcame me in a lockdown excursion to my taxman’s office. For the sake of this piece, we will call him Tony. We love Tony. In this story, I am the tax protagonist and Tony is my sidekick oracle that I didn’t consult/harass enough. Any fault there is all mine. 

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Tony and I met last year after I had a past meltdown about knowing literally nothing regarding my taxes as a sole trader with an ABN charging people for words-writing and other stuff. I went into this year’s tax review meeting comically calm and certain of my reasonably decent fiscal fate. 

Turns out, I royally fucked up on a few vital bits of money stuff and am going to haemorrhage the gruesome details here so, unlike me, you don’t find yourself crying in the tax office

A lazy tax-indifferent girl’s mistakes can be your fortune

I have two part-time income streams that are taxed. Under Aus law, there is a thing called the tax-free threshold. That is, the first $18,200 of your income in each income year is tax-free. If you have more than one payer (like me), you can claim the tax-free threshold from one of your jobs, meaning they will pay the full amount you’re owed direct to your bank account, without funnelling any to the taxman.

The key here is to only do this with one employer. However, I accidentally did this with both. Mistake number one, reader. This landed me with a cute and unnecessary five-ish thousand dollars in tax monies owing. Next, I went to university in staggered stints between 2016 to 2020. Another mistake. Kidding. But tertiary education incurs debt, and lots of it. I like to think my HECS is the price I pay for the spectacular friendships I made during my degree, as I didn’t feel any other significant gain from it in the end.

Without properly educating myself (or asking Tony) about what to expect once I earned enough money to pay off my HECS debt, I was shocked to be told roughly another $5000 needed to be put towards chipping that away. And so the HECS debt looms, with three of four quarters of the overall debt still left to pay in future years.

My royal PAYG blunder

Update: We’re now at the $10k or so mark here in tax money I owe to the government. Next came some further thousands owing, because I’ve been actually earning money as a freelance writer and naturally, have to pay some tax back. For those who might not know, freelancers are typically paid by invoicing for their services and receiving the full amount. Unlike in a typical employment situation, where the payer funnels some into your super and some to pay your tax, it’s up to you as an individual to organise your earnings.

Here, my third and final error was exposed. I was careful to set up clever PAYG (pay as you go) instalments (akin to a Business Activity Statement for businesses) to pay a set sum of money, quarterly, to the ATO. This was in a bid to prepare me for this year’s tax review. However, my income outgrew these payment estimations. Hence my current suffering.

What I should have done – and will now solemnly swear to do in future – is analyse my freelance income (i.e. add up all invoices in a quarterly period) to track my earnings and keep Tony/the ATO in the loop with any fluctuations, up or down. This means my PAYG instalments can be updated accordingly, and I will never be caught out with nasty surprises in the tax hot seat ever again. This is my idyllic vision and financial goal for the next year, at least.

Processing, grieving and coming to terms with reform

While I’m still recovering from Tony swivelling his computer monitor around to show me my wild tax debt figure, he did congratulate me on what I managed to achieve in the last financial year at a relatively young age, especially when compared to the one prior.

That ‘Notice of Assessment’ left a sting, for sure. I felt sick calling my mum from the car post-review, dizzy with the thought of putting every cent from here until March next year (my due date) towards this almighty debt. But then she did the same as Tony, and flipped my catastrophisation on its head. She prompted me to recognise the silver lining: I am learning, I am working hard, I am improving.

Now, I have the strictest savings plan in place and have already managed to curb my frivolous spending habits tenfold. This could be a bit lockdown-induced, but I’ve not thought once about ordering a single piece of clothing online since that meeting on the ninth of August. I’m shocked at what I’ve managed to lock away in less than one month from simply having put my mind to a financial commitment.

The most ominous (but doable) deadline of all time

My PAYG instalments have been adjusted accordingly to roughly triple what they were last year. I’m planning to update Tony every quarter on where I’m at with my income streams and freelance movements, sussing what he’s vibing with all the tax-y stuff. I’ll need to save up for my tax return sum, plus two lots of amplified PAYG instalments roughly around the same time. 

It will be brutal to make my March 2022 payment, but if I can get it right, I’ll be a veritable Isla Fisher/Girl in the Green Scarf prodigy transformation in years to come. I call it character development. 

My advice would be this: get financially literate, ask loads of questions and don’t exempt yourself from knowing about tax/money because you’re a twenty-something-year-old woman like I did. I was way too nonchalant about the whole process, expecting it to be taught to me. Learning it the hard way is rough, but I’m so glad I know what I do now and am in the fortunate position to be able to have time and opportunities to ensure I’m still enjoying life during this savings period.

Genevieve Phelan is Fashion Journal’s Lifestyle & Careers Columnist. Her writing fuses introspection with investigation, calling on her own personal anecdotes and the advice of admired experts in the realms of intimacy, money, friendship, careers and love. You can find her here and here.

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