Why Your Side-Hustle Could Mean a Shock Tax Bill This Year
If you've been picking up extra cash through a side-hustle, freelance gig, or content creation, you might be in for a nasty surprise this tax time.
The Australian Taxation Office (ATO) has zeroed in on gig economy workers, and the days of side-hustle income flying under the radar are officially over. As a Chartered Accountant in public practice, I want to ensure our clients are fully prepared for these sweeping changes.
Here is what you need to know about the ATO’s new rules, why you might be at risk of a shock tax bill, and how we can help you navigate it.
The ATO is Watching: The Sharing Economy Reporting Regime (SERR)
Historically, the ATO relied on individuals to self-declare the income they earned from gig platforms. Many people simply didn't realise that earnings from digital platforms are classified as taxable income, leading to widespread under-reporting.
That all changes this financial year. Under the expanded Sharing Economy Reporting Regime (SERR), digital service platforms are now legally required to report the income earned by their users directly to the ATO.
This brings gig platforms into line with banks and employers. The ATO is now using sophisticated data-matching to pre-fill your tax return, meaning they already know what you’ve earned before you even sit down to lodge.
Who is in the ATO's Crosshairs?
The net is cast incredibly wide. You are impacted by these reporting rules if you make money through:
- Delivery and Task Apps: UberEats, DoorDash, Airtasker, Menulog.
- Content Creation & Streaming: YouTube, Patreon, Twitch, OnlyFans.
- Asset Sharing: Renting out a car parking space, lending out your designer handbag, using peer-to-peer car-sharing apps, or listing your property on Airbnb.
- Influencer Marketing: Warning for influencers! The ATO expects you to declare the value of any gifts or gratuities you receive as payment. Free holidays, cars, clothes, or products are all considered taxable income.
A Quick Note for Property Investors & Airbnb Hosts:
Short-term rentals are a massive focus for the ATO's data-matching programs. If you are currently deciding how to best utilise your investment property, we highly recommend reading our financial breakdown on Airbnb vs. Long-Term Rentals. Furthermore, if you've already taken the plunge into the short-term market, protecting your asset is just as important as managing the tax. Our sister company, Tenfold Property Advisory, has put together excellent sample house rules for an Australian Airbnb investment property to help you run a tight, profitable, and compliant ship.
If you earn over the tax-free threshold of $18,200 (combined with your regular day job), you must pay tax on this income. Failing to declare it risks amended returns, hefty tax bills, and ATO penalties.
The Silver Lining: What You Can Claim
While the ATO is cracking down on income, you are still legally entitled to claim deductions for expenses directly related to your side-hustle. As your specialist tax accountants, we ensure you don't pay a cent more in tax than you have to.
Depending on your gig, we may be able to help you claim:
- Work From Home Expenses: A portion of your phone, internet, and energy costs.
- Motor Vehicle Expenses: Fuel, repairs, and depreciation for delivery drivers (based strictly on your logbooked business-use percentage).
- Tools of the Trade: Cameras, professional lighting, editing software, or specialised equipment (must be apportioned for business use).
- Travel Costs: Specific travel between different work locations.
Note: You can only claim expenses if you spent the money yourself, weren't reimbursed, and have proof of purchase.
How Tenfold Wealth Accountants Can Help
With the ATO's data-matching regime more aggressive than ever, DIY tax returns are becoming a minefield for anyone with a side-hustle.
At Tenfold Wealth Accountants, we are experienced, 100% digital Chartered Accountants who can help you:
- Ensure Compliance: We’ll accurately declare your new economy and digital business income so you avoid ATO red flags and penalties.
- Maximise Deductions: We’ll dig into your expenses to claim every single deduction you are legally entitled to, helping offset any potential tax bill.
- Manage Obligations: We can advise you on whether you need an ABN, and if your side-hustle requires you to register for GST.
Don’t Wait for a Shock Bill
If you’ve had a successful year earning extra cash through a digital platform, don’t leave your tax to chance.
Book a consultation with Tenfold Wealth Accountants today. Let us do the heavy lifting via a quick, paperless Google Meet or phone appointment, so you can get back to growing your hustle with complete peace of mind.
