This could be anything from animal breeding to earning income by selling items through digital platforms, gig performing, doing bootcamps, delivery driving, or even online content creation.
With new and emerging ways to make money, the Australian Taxation Office (ATO) is reminding taxpayers to consider if they are ‘in business’ and to declare all income when lodging their tax return this year.
Record numbers of taxpayers are now working multiple jobs or supplementing their income with ‘side hustles’ or ‘gig’ economy activities, and it’s important everyone pays the right amount of tax.
ATO Assistant Commissioner Tim Loh said if you earn money through continuous and repeated activities for the purpose of making a profit, then it’s likely you’re running a business.
“While there are always new and different ways to make money, the tax obligations remain the same. Don’t fall into the trap of forgetting to include all your income thinking the ATO won’t notice,” Mr Loh says.
“You also need to declare any additional income earned through that side hustle.”
Businesses have a range of obligations depending on their structure and turnover, including registering for an Australian business number, keeping the right records and lodging the right type of tax return. They may also have to register for goods and services tax (GST).
“If your home has become more like a warehouse and is stocked to the hilt with goods to sell, then you may in fact be running a business.
“If you’re running bootcamp sessions, in addition to your 9-5 job, well this is a side hustle and you need to declare this income to the ATO.”
Mr Loh acknowledged; “sometimes it’s hard to tell if you’re ‘in business’ and we recognise not everything you do to make money is considered a business.
“The ATO won’t consider activities as ‘in business’ when they are a one-off transaction (unless it is the first step in carrying on a business or intended to be repeated) or an activity from which you don't seek to make a profit.”
The ATO has sophisticated data-matching and analytical tools to identify taxpayers that under-report their income.
From 1 July 2023, the Sharing Economy Reporting Regime will commence and the ATO will receive data from more electronic distribution platforms. The ATO will match this information with the information taxpayers provide on their tax return or activity statement to identify income that has not been included.
“It doesn’t matter whether you are carrying on a business or simply earning additional income through a digital platform, such as a website or even an app, you must keep accurate records of your income and include it in your tax return,” Mr Loh said.
“Every dollar dodged is a dollar that can’t be used for vital services like health and education.
“The ATO needs to ensure there is a level playing field for everyone, with no unfair advantages,” Mr Loh said.
If you are finding your feet in business, the ATO is here to support you. The ATO has new to business resources, webinars and tools to help you kick-off on the right foot. You can also talk to a registered tax professional.
The ATO has a range of information available for new businesses at ato.gov.au/Newtobusiness
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