Software company Hnry helps hold sole traders accountable for tax payments

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Data released last year by the Inspector General of Taxation showed that small businesses, which include sole traders, consistently accounted for more than 60% of debt held by the Australian Taxation Office (ATO).

In dollar terms, this represents A$21 billion of the total A$34 billion owed to the ATO at the end of the 2020 financial year.

However, the founders of a New Zealand-based software company, James and Claire Fuller, have developed a platform called Hnry to help sole traders automatically calculate, deduct and pay their income tax, products and services, health insurance and student loans, once they receive payment.

The company was established in 2017, before launching in Australia in 2020.

Speaking to ZDNet, Karan Anand, Head of Hnry Australia, explained that the app was designed to help independent traders, such as traders and creative freelancers, take the guesswork out of financial administration, while ensuring the ATO – and its New Zealand equivalent, Inland Revenue Department (IRD) – receive the tax due.

“At the end of the day, the ATO gets the money sooner rather than waiting for a lump sum payment at the end, because we automatically pay income tax and GST. We now deal in Australia and New Zealand. Zealand over half a billion dollars in payments a year. , so suffice it to say that we paid tens and millions of dollars in taxes to the ATO and IRD which is simply better for the government,” he said.

Hnry works by setting up users with a new Hnry bank account provided by either National Australia Bank or Cuscal in Australia or ASB Bank, a subsidiary of Commonwealth Bank of Australia in New Zealand. Once configured, Hnry will automatically deduct the taxable amount before the after-tax amount is paid into the user’s personal bank account, at a total cost of 1% plus GST from the gross income amount. Fees are capped at AU$1,500 per year.

“It happens automatically as soon as you receive each payment,” Anand said.

He added that the system behind it relies on scalable algorithms to calculate the amount of tax due based on a person’s income pattern.

“Fortunately for us, the tax rates are pretty clear: the tax rates applied to individual ABN traders are the same as those applied to individuals, and we know what tax rates to base you on based on the forecast. income that you provide to us If you If you have salary income, we also ask for it.

“Then what the system does is it takes your income pattern each time you get paid and re-projects your income on an annualized basis and then correctly assigns the correct amount of tax that needs to be withdrawn You can imagine with our data set after thousands of customers have done this for years we are constantly evolving the algorithm but luckily it’s not rocket science in the sense that the tax thresholds are quite clear.

Other services integrated into the platform allow users to create quotes, invoices, upload business expenses and access reports. In addition, Hnry will also file tax returns when due at year-end.

“We are also your tax agents,” Anand said. “If you have any questions about optimizing deductions or questions from a tax perspective, we’re always here to help. We’re kind of part payment, part bookkeeping software and accountants in part.”

Five years after its creation, the company has more than 10,000 customers and a total workforce of 40 people. It now has more plans for expansion after raising A$15 million in a funding round led by New York-based venture capital firm Left Lane. Capital city.

“We have a million and a half independent traders in Australia and around 400,000 to 500,000 in New Zealand, and we’ve only reached the tip of the iceberg here,” Anand said. He stressed that the plan will include doubling the company’s workforce and exploring expansion into other markets, which he said will be a “very thoughtful” process of where to go next.

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