Hobby or business?
The ATO looks at whether you’re doing it to make a profit, how often and how organised it is, and whether it’s like other businesses. Selling things you’ve made or bought to sell, regularly, is usually a business. Selling your own used things isn’t taxable.
Signs it’s a business: you advertise, keep records, set prices to make a profit, and do it regularly. Gig work through apps, such as food delivery, ride-sourcing or freelancing, is income from the start.
ABN and GST
- ABN: you need one once you’re carrying on an enterprise, such as freelancing or gig work. It’s free to apply. Without one, some payers must withhold 47% of what they pay you.
- GST: register once your turnover reaches $75,000 a year. Ride-sourcing drivers must register from their first dollar. Once registered, you add 10% GST to your prices and lodge activity statements.
Platforms report your income
Under the sharing economy reporting regime, platforms report what their sellers earn to the ATO: ride-sourcing and short-term accommodation since July 2023, and most other platforms since July 2024. The ATO matches it against your tax return, so leaving it out is easy to spot.
How it’s taxed
Your profit is added to your other income and taxed at your marginal rate, plus the Medicare levy. There’s no separate tax-free amount: the $18,200 tax-free threshold applies once, and your salary usually uses it up. If you have a HELP debt, the extra income also raises your compulsory repayment.
- No study loan You keep $6,800
- Income tax $3,000 Medicare levy $200
- With a HELP debt You keep $5,300
- Income tax $3,000 Medicare levy $200 HELP $1,500
Profit is what you earn less your business expenses. A HELP repayment isn’t a tax: it comes off your study debt.
Sole traders also get the small business income tax offset: 16% of the income tax on their business profit, up to $1,000 a year. It’s worked out when you lodge. Try the sole trader tax calculator.
Expenses you can deduct
Costs you need to earn the income, such as supplies, equipment, fees the platform charges, part of your phone and internet, and car expenses for work trips. If something is partly for private use, claim only the work share. Keep records for 5 years.
Renting out a room or your home on a short-stay platform is rental income, not a business. You can claim a share of the costs, but it can mean paying some capital gains tax when you sell your home.
Paying the tax
You pay it when you lodge your tax return, so put money aside each time you’re paid: a separate savings account works well. Once your business or investment income passes $4,000 and you owe enough tax, the ATO puts you on PAYG instalments, paid during the year, usually each quarter.
Super isn’t paid for you on side income. You can make your own contributions and claim a deduction, so they’re taxed at 15% in your fund instead of your marginal rate.