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Tax Issues

The ATO is currently considering the relationship between sex workers and brothel owners and management, for the purposes of determining tax arrangements and GST collection. Watch this space as Scarlet Alliance prepares submissions for on this topic ....

Australian Taxation Office (ATO)
The ATO has held forums around Australia describing its current education phase of raising awareness within the Sex Industry of taxation requirements. The ATO spokesperson explained that on a certain date (still to be set) the ATO will expect Australian Sex Industry Businesses to fall into compliance with taxation laws. From statements made at one of the forums it seems that the ATO believes that whilst many sex workers do pay tax, compliance by the sex industry is low.

Sex workers can contact their local sex worker organisation for information on accountants with knowledge in this area. Contact Info

The ATO has (and does) estimate a persons earnings if they have not kept records themselves. An accountant can provide you with information on what records must be kept. The ATO will provide anonymous phone advice.

Currently there is a lack of understanding of the relationships between brothels and sex workers employed by the businesses. It seems that owners and operators are keen to have the relationship understood as simply a room rental or sub contracting or contracting relationship. There are many examples of business/industry attempting to describe employees as contractors (not just in the Sex Industry) in order fhat the business can avoid the responsibility of workers compensation insurance, superannuation and sick pay etc.

Whether you are a employee, sub contractor or contractor is determined on an individual case by investigating a range of factors or expectations of you by the house or brothel.

An important aspect of who (the brothel or the sex worker) is responsible for collecting (and paying to the ATO) the 10% GST is not so much reliant on who collects the money from the client but rather who ends up with the amount collected from the client (the house -brothel- or the individual sex worker). This factor is an important element in the ATO deciding your work relationship and therefore whether or not you or the "house" or brothel is responsible for paying GST to the ATO.

Scarlet Alliance has provided critical feedback to the ATO on a flyer which we believe does not reflect the available deductions or work relationships of sex workers in Australia. Our work on this issue will focus on ensuring that sex workers have accurate information available to them on both their rights and responsibilities. We will also advocate that the ATO acknowledges the privacy issues for sex workers, that registration is not appropriate for individual sex workers, that information compiled specifically for sex workers is corrected to ensure it does not further confuse sex workers on either their rights or responsibilities.

Scarlet Alliance will provide more information as it becomes available.

There is some basic information on the ATO website. Link to ATO web site

Updated 15th December 2006