There are a number of additional ways to earn an income aside from earning a salary. It is important to know the difference between a hobby and a business, and how your additional income streams will be treated at tax time. And so, it is more important than ever to ensure that ALL of your income is correctly reported in your tax return.
Some additional ways income can be earnt by an individual include, but are not limited to:
1. Content creation and brand promotion (via YouTube, Instagram, etc.)
4. Ride sharing services such as uber
5. Delivery driving through platforms such as uber eats or menulog
6. Selling items online through marketplace or Gumtree
When trying to distinguish whether an online source of income is a hobby or a business, the ATO asks the following questions:
1. Is your intention to make a profit?
2. Do you pay for the online space you sell through?
3. Do you make repeated or regular sales?
4. Do you manage the online selling as if it were a business? (advertising, processes etc)
5. Do you charge more for the products than what they cost?
6. Do you keep records?
If you answer yes to the above questions, it is likely you are running a business and must include this income in your tax return accordingly.
To learn more regarding the ATO’s requirements for Online Selling, go to their website here.
The ATO also discusses the implications of the sharing economy. The Sharing Economy is a “peer-to-peer activity of acquiring, providing, or sharing access to goods and services often facilitated by an on-line platform”. A great example of this is ride-sourcing (or ridesharing). According to the ATO, Income tax applies to your ride sharing income. Ride-sourcing is also subject to goods and services tax (GST). All ride-share drivers must have an Australian Business Number (ABN) and be registered for GST. If you are a ride share driver, we recommend going to the ATO’s website to ensure you are tax compliant.
Another popular form of peer-to-peer sharing is hiring a caravan or motorhome (similar to airBnb). One example you may have heard of is Camplify. The ATO also has regulations in place which must be adhered to if you generate income from a platform like Camplify. If you hire out a caravan or RV, be sure to familiarise yourself with the ATO tax requirements.
If you need clarification as to whether your side hustle income is a hobby or a business, please contact us by email or call 07 5451 1118.