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ATO side-hustle crackdown: ‘Don’t fall into the trap’

Aussies with a side hustle have been put on notice by the tax office.

A crowd of people crossing the street in the Sydney CBD and someone filling out an ATO deductions form.
The ATO has issued a warning to Aussies with a side hustle. (Source: Getty)

With Aussies turning to new and creative ways to make money in the cost-of-living crisis, the Australian Taxation Office (ATO) has issued a warning about declaring income this tax time.

Record numbers of taxpayers are now working multiple jobs or supplementing their income with ‘side hustles’ or ‘gig’ economy activities, according to the ATO.

ATO assistant commissioner Tim Loh said if you earned money through continuous and repeated activities for the purpose of making a profit, then it was likely you were running a business.

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“While there are always new and different ways to make money, the tax obligations remain the same. Don’t fall into the trap of forgetting to include all your income thinking the ATO won’t notice,” Loh said.

“You also need to declare any additional income earned through that side hustle.”

How do I declare my side hustle income?

Businesses have a range of obligations, depending on their structure and turnover, including registering for an Australian Business Number, keeping the right records and lodging the right type of tax return. They may also have to register for goods and services tax (GST).

“With tax time just around the corner, if you are bolstering your income with new activities, make sure all your records are up to scratch,” Loh said.

“This could be anything from animal breeding to earning income through digital platforms, such as rideshare or food delivery, or even online content creation, like social media influencers.

“If your home has become more like a warehouse and is stocked to the hilt with goods to sell, then you may in fact be running a business.

“If you’re running bootcamp sessions, in addition to your 9-5 job, well this is a side hustle and you need to declare this income to the ATO.

“If you’re an online content creator earning money or receiving gifts, you’re also likely to be running a business and there are tax obligations you need to comply with.”

How do I know if I’m technically ‘in business’?

Loh acknowledged that it might be tough for some Aussies to determine if they were “in business” as not everything that earned you money was considered a business.

The ATO won’t consider activities as ‘in business’ when they are a one-off transaction (unless it is the first step in carrying on a business or intended to be repeated) or an activity from which you don't seek to make a profit.

The ATO reminded Aussies it had sophisticated data-matching and analytical tools to identify taxpayers under-reporting their income.

From July 1, 2023, the Sharing Economy Reporting Regime will commence and the ATO will receive data from more electronic distribution platforms.

The ATO will match this information with the information taxpayers provide on their tax return or activity statement to identify income that has not been included.

“It doesn’t matter whether you are carrying on a business or simply earning additional income through a digital platform - such as a website or even an app - you must keep accurate records of your income and include it in your tax return,” Loh said.

“Every dollar dodged is a dollar that can’t be used for vital services like health and education.The ATO needs to ensure there is a level playing field for everyone, with no unfair advantages.”

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