Every Day I’m Hustlin’

August 21, 2024

Ryan Schirmer

With the rise of social media like TikTok, the thousands of ideas are spread by the hour on how to earn extra coin on the side. Being part of the ‘Gig’ economy such as ridesharing, freelancing or having a ‘Side Hustle’ like drop-shipping and social media content creation might earn you some spare cash.

If you’re earning money through a side hustle or gig work, it’s important to understand your tax obligations with the ATO. Here are some key points to keep in mind:

1. Declare All Income: Any income you earn from your side hustle or gig work must be declared to the ATO, even if it’s a small amount. The ATO considers this income as assessable, and failing to declare it can lead to penalties.
2. Register for an ABN: If you’re working as a freelancer or running a business as part of your side hustle, you may need to register for an Australian Business Number (ABN). This is necessary for invoicing and may be required by the platforms you use to find work.
3. Goods and Services Tax (GST): If your earnings from your side hustle exceed $75,000 per year, you will need to register for GST and charge it on your sales. This applies to most goods and services, but there are some exceptions, such as income from Ridesharing which requires you to register for GST for your first $1.
4. Deductions: The good news is that you can claim deductions for expenses related to your side hustle. This could include things like internet costs, equipment, software, or even vehicle expenses if you’re driving for a rideshare service. Keeping detailed records of these expenses is crucial for your tax return.

Tips for Managing Your Side Hustle Tax

• Keep Accurate Records: Maintain detailed records or use accounting software to keep track of all your income and expenses related to your side hustle. This will make it easier to complete your tax return and ensure you’re not missing out on any deductions.
• Set Aside Money for Tax: It can be easy to forget that the money you earn isn’t all yours to keep. Setting aside a portion of your income for tax can help you avoid a large bill at the end of the financial year.
• Seek Advice: the tax legislation can get very complicated very quickly; speaking to your accountant to discuss how tax will impact, getting into a right structure and managing cash flow is vital to the success of your business.