Before any deduction on the other pages of this guide matters, two things about the income side need to be right: what counts as income, and what kind of worker you are. Tips are the part hospitality is most likely to get caught on, and status, whether you're a PAYG employee or working under an ABN, decides how you're taxed and what you can claim. Neither takes long to sort, and getting them right is what everything else in this guide rests on.
Tips are income, and they are yours to declare
Start with the money coming in, because this is the part hospitality is most likely to get caught on. Every tip you earn is assessable income, no matter how it reaches you. A note pressed into your hand at the end of a good night, a few dollars added on the card machine, or your share of a pool the venue splits between the floor and the kitchen: all of it counts, and all of it goes on your return. This is not us being strict for the sake of it. It is simply how tips are treated, and it is the same for cash wages if you are ever paid that way.
Cash handed to you straight across the bar is the tip that often does not show up anywhere, and that is exactly the one you need to look after.
The practical bit is where the tips land before you see them. When the venue shares out card or pooled tips, they usually run through the till and turn up in the income statement you get through myGov, so that side is already counted for you. Keep a running tally of any cash handed to you directly, a note on your phone at the end of each shift is plenty, and add it in at tax time.
The other thing to get right is your status
Once the income is sorted, there is one more question that shapes everything else on these pages: are you a PAYG employee, or are you working under an ABN? It sounds like paperwork, but it decides how you are taxed and what you are able to claim, so it is worth thirty seconds even if you are fairly sure. The good news is that it usually settles quickly. Almost everyone pulling beers, running plates, working the pass or the coffee machine is an employee, so that is who this whole guide is written for. A small number of hospitality workers are on an ABN, and if that turns out to be you, some of the rules in the rest of this guide change.
How to tell which one you are
You do not need to dig out a contract for this. The way you get paid tells you plainly.
Most hospitality staff read straight down the first line. The people who sometimes sit on the second are function and event casuals hired for a one-off, freelance or private chefs cooking for clients, mobile coffee-cart operators running their own rig, and some bar staff brought in on a contract. If that is not you, you are an employee, and you are in the right place.
What changes if you are on an ABN
If you invoice for your work, you are not filling in a wages return. You are running a small business, and the rules open up in both directions.
You generally do not need to register for GST or lodge a business activity statement.
Once your turnover reaches $75,000 in a rolling twelve months you must register for GST, charge it on your work, and lodge a BAS through the year.
That is the outline, not the full picture, and running an ABN is a real set of obligations. If this is you, the rules are wider than one chapter can properly cover, and a registered tax agent will more than earn their fee. One thing worth naming plainly: some venues put casual floor or kitchen staff on an ABN when the work is really just a job, with set shifts and someone else calling the shots. Genuine hospitality staff are almost always employees whatever the venue chooses to call it, so if that sounds like your situation, get advice on where you actually stand before you lodge anything.
Your records depend on which one you are
Whichever side you land on, the trick is writing things down as they happen rather than reconstructing the year in July. What you keep differs, though.
- As an employee: receipts for the gear you paid for yourself, a note of the work share on anything used for both work and life, and a running tally of the cash tips you took.
- On an ABN: full business records, income and expenses both, and the BAS lodgements as well once GST is in play.
Either way, the ATO's free myDeductions app will hold the basics for you as you go.
The bottom line
Two things carry this chapter. Declare every tip, including the cash ones no one else is tracking, and keep a quiet tally so nothing gets lost. Then, if you are not certain whether you are an employee or working under an ABN, settle that before you do anything else, because it decides how you are taxed and what the rest of this guide means for you. Sort those two, and everything that follows lands where it should.
If you are an employed hospitality worker, see what your tools, uniform, laundry and other work costs add up to at tax time.
General information only, not tax advice. Check the ATO or a registered tax agent for your situation.