Side Hustle Tax in Australia: What You Need to Know

Do You Need to Pay Tax on Your Side Hustle?

If you're earning income from a side hustle in Australia, it's important to understand your tax obligations. Whether you’re freelancing, selling products online, or participating in the gig economy, any income you generate must be reported to the Australian Taxation Office (ATO).

Taxable Income & Reporting Obligations

The ATO requires all income to be declared, whether from a full-time job, a side business, or freelance work. If you earn over the tax-free threshold ($18,200 per year), you’ll need to pay tax based on your total income. If your side hustle earns over $75,000 annually, you must also register for Goods and Services Tax (GST).

How to Prepare for Tax Season

• Keep Records: Track all income and business expenses, including receipts and invoices.
• Set Aside Tax Payments: Unlike salaried jobs, no tax is withheld from side hustle earnings. It's advisable to set aside 20-30% of your income for tax obligations.
• Register for an ABN: If operating as a sole trader, an Australian Business Number (ABN) is required.

Common Tax Deductions

Side hustlers can claim deductions on business expenses such as:

• Home office costs (electricity, internet, equipment)
• Work-related travel expenses
• Marketing and advertising costs
• Professional services (accounting, legal fees, training)

Managing PAYG Tax & Instalments

If your side hustle income increases your tax liability, you may need to make Pay As You Go (PAYG) instalments to avoid a lump sum payment at tax time. The ATO can estimate your tax and provide options for quarterly payments.

Final Thoughts

Running a side hustle can be rewarding, but it comes with tax responsibilities. By understanding your obligations and keeping accurate records, you can stay compliant and avoid unexpected tax bills.

For personalized tax advice, always consult with a qualified accountant.