Side Hustle Tax Australia 2026: ABN, GST & What You Must Declare

15 March 2026|5 min read

Tax guide for Australian side hustlers. How the ATO determines hobby vs business, when you need an ABN, what income you must declare, and the deductions you can claim for your side gig.

Hobby vs business: how the ATO decides

The ATO uses several factors to determine whether your activity is a hobby or a business. If it is a hobby, you do not declare the income and cannot claim deductions. If it is a business, you must declare all income and can claim related expenses. The key factors the ATO considers include: whether you intend to make a profit (or at least have a genuine business plan to become profitable), whether the activity is repeated and regular (not a one-off sale), the size and scale of the activity, whether you keep business records and have a separate bank account, whether you have obtained an ABN, and whether the activity is conducted in a businesslike manner. Selling a few items on Facebook Marketplace to declutter is a hobby. Regularly buying and reselling items for profit on eBay is likely a business. Doing occasional photography for friends is a hobby. Advertising photography services, setting prices, and booking regular clients is a business. The ATO looks at the overall picture — no single factor is decisive. If you are genuinely trying to make money through a systematic, ongoing activity, the ATO will likely treat it as a business regardless of how much you actually earn.

When you need an ABN

An Australian Business Number (ABN) is required if you are carrying on a business or enterprise — including a side hustle that meets the business definition. You need an ABN if you are providing services to clients or customers in a businesslike manner, selling goods regularly for profit, freelancing or contracting (even part-time), or driving for ride-share platforms like Uber or DiDi. You do not need an ABN for genuine hobbies, one-off sales of personal items, or if you are an employee (your employer handles tax). Applying for an ABN is free through the Australian Business Register website and takes about 20 minutes. Without an ABN, businesses that pay you may withhold 47% of your payment under the no-ABN withholding rules. If you have an ABN, you must include it on all invoices and register for GST once your turnover exceeds $75,000 (or immediately if you are a ride-share driver). Having an ABN does not automatically mean you must register for GST — they are separate obligations. You can hold an ABN as a sole trader alongside your regular employment without any conflict.

Declaring side hustle income

All business income from your side hustle must be declared on your tax return, regardless of the amount. There is no minimum threshold below which income is tax-free — even $500 from occasional freelance work must be declared. Side hustle income is reported in the business and professional items section of your tax return, not as salary and wages. If you operate as a sole trader, the net profit (income minus deductions) is added to your other income and taxed at your marginal rate. This means your side hustle income is effectively taxed at the top of your income stack. If your salary is $80,000 and your side hustle earns $15,000 profit, that $15,000 is taxed at the marginal rate for income between $80,000 and $95,000 — currently 30% plus 2% Medicare levy, costing you $4,800 in tax. Platform income from gig economy services (Uber, Airtasker, Deliveroo, Airbnb) is reported to the ATO through data-matching programs, so the ATO knows how much you earned even if you do not declare it. Failing to declare income is the highest-risk action you can take and will likely result in penalties and interest.

Deductions you can claim for your side hustle

As a side hustle operator, you can claim deductions for expenses directly related to earning your business income. Common deductions include: materials and supplies used for your work, equipment purchases (depreciated if over $300, or instantly deducted if eligible for the instant asset write-off), vehicle expenses for business travel (log book method or cents-per-km at 85c/km for 2025-26), home office expenses if you work from home (67c per hour fixed rate or actual costs), phone and internet costs (business use proportion only), professional development and training, software subscriptions and apps used for the business, advertising and marketing costs (including website hosting and social media promotion), accounting and tax agent fees, insurance related to the business (public liability, professional indemnity), and bank fees on your business account. The golden rule is that the expense must be directly connected to earning your business income, you must have actually incurred it (not been reimbursed), and you must have records to substantiate it. If an expense is partly personal, only the business portion is deductible.

Keeping records: receipts, mileage, and bank statements

The ATO requires you to keep records of all income and expenses for five years from the date you lodge your return. For a side hustle, this means keeping every receipt for business purchases (digital photos are acceptable), maintaining a log book if you claim vehicle expenses (a 12-week log book is valid for five years unless your driving pattern changes significantly), keeping a record of all invoices issued and payments received, maintaining a separate bank account or clearly marking business transactions in your personal account, and keeping a record of hours worked from home if you claim the fixed-rate method. Good record keeping throughout the year saves enormous time and stress at tax time. Set up a dedicated folder in your email for digital receipts, use an app like the ATO's myDeductions to log expenses as they occur, and reconcile your records monthly rather than trying to reconstruct a year's worth of transactions in July. If you are audited and cannot substantiate a deduction, the ATO will disallow it and may impose penalties. For side hustlers earning more than a few thousand dollars, using basic accounting software like Xero or MYOB (which are themselves tax-deductible) is well worth the investment.