The ATO has reminded taxpayers of its close attention to undeclared income from secondary work, including from the sharing or “gig” economy.

Assistant Commissioner Tim Loh has clarified the confusion about when these side hustles become side business and taxable.

A person receiving payments for the side hustle services, irrespective of whether they are employees, independent contractors, carrying on a business, or none of these, needs to report their income — even if it is a one-off. The Pay As You Go Instalment system helps individuals set aside tax payments throughout the year to avoid bill shock.

Expenses incurred from a side hustle can be claimed as deductions upon providing receipts. However, only the work-related part of expenses can be claimed as deductions. It includes the cost of managing tax affairs through a registered tax agent. Food delivery riders can claim some of their bike costs if they relate to earning income, but cannot claim their personal riding expenses.

A person needs to consider their additional tax obligations, including the need for an Australian Business Number, registering for GST, implementing a record-keeping system to track income and expenses if the side hustle becomes a side business. They also need a plan for paying tax on their business income when they lodge their activity statements and annual tax returns and may need to seek advice from a registered tax agent.

Source: ATO, Side hustles are front of mind this tax season, [media release], 16 September 2021, accessed 16 September 2021.