Who doesn’t want to make extra cash on the side, doing something they love!? However, not every hobby is a side-hustle and this is important to work out first before diving into the tax implications!
A ‘side-hustle’ is typically a form of income or income generating activity that is outside your primary job or business. It could be secondary income on top of your normal salary or wage, a second business you have started, or some other activity that you receive money from. The Australian Tax Office recently shared some examples that might constitute a side-hustle such as; content creators on media platforms, gig economy work, freelancing etc
Further, if your activity is a set of continuous and repeated activities you carry out for the purpose of making a profit, then you are “in business”. Profit can take a number of forms, such as; money received, or barter deals – where you are paid in goods and services. Even a one-off transaction can be a business if it is intended to be repeated or a step towards starting a business. In all these cases there will be tax implications to consider.
One thing to remember, the government would like to know about all your income for taxation purposes. If you are generating additional income outside your regular employer, who is facilitating your tax obligations, you may need to consider PAYG (pay as you go tax) on your additional side-hustle income to avoid a large tax bill!
You may also want to consider what sort of entity the side-hustle should be? Is it a business or are you a sole-trader, do you need to be registered for GST or have an ABN? Whether you are thinking about starting a side-hustle, or are already underway, your accountant is well placed to help you understand your tax obligations, and work out the best next steps to have your side-hustle efforts working best for your context.
For more information make an appointment with Vine Accounting or check out the resources available at www.ato.gov.au.