What counts as a hobby, what counts as a business, and what the ATO expects you to declare from your side income.
Side hustles have become mainstream. Selling on Etsy, driving for Uber, hosting on Airbnb, freelancing on Upwork, reselling sneakers — the ATO sees all of it now, and the line between "fun on the side" and "ATO wants to talk to you" is thinner than most people realise. This guide walks through what's a hobby, what's a business, what you need to declare, and what you can claim.
This is where everything starts. A hobby is something you do for enjoyment, with no expectation of profit, and not in a businesslike way. A business is an enterprise carried out for profit, with regularity and system. The ATO doesn't apply a single rule; it weighs several factors from its "Are you in business?" guidance:
Selling a few unused things on Marketplace once a year is a hobby. Listing 50 items on eBay monthly with a profit margin is a business. Driving Uber on weekends with the intent of regular income is a business from the first ride. Painting watercolours and selling the occasional one at a market is usually a hobby. Doing the same with a stall, an ABN, marketing spend and consistent income is a business.
Apply through abr.gov.au. The ABN identifies you as a business to the ATO and to platforms that need to pay you. Many platforms (Uber, Airbnb, Amazon, food delivery apps) won't onboard you without one. There's no cost.
Business income goes on your individual tax return under "Business and professional items" if you operate as a sole trader. If you've set up a company or trust, the structure has its own return.
Net business income (revenue minus expenses) stacks on top of your salary. If you earn $80,000 from your day job and $20,000 net from your side hustle, you're taxed as if you earned $100,000 in total. The ATO doesn't withhold tax from side hustle income, so you'll typically owe a chunk at tax time — see "PAYG instalments" below.
This is turnover (gross sales), not profit. Once you hit $75,000 in a 12-month rolling period, GST registration is compulsory. You then charge 10% GST on your sales, claim GST credits on your business expenses, and lodge a BAS quarterly. Below $75k, GST registration is optional but generally not worth it for small side hustles.
Important exception: ride-sourcing drivers (Uber, DiDi, Ola) must register for GST from their first dollar of fares, regardless of turnover.
Anything you spend to earn the income is potentially deductible, subject to the usual rules. Common side hustle deductions:
| Hustle type | Common deductions |
|---|---|
| Rideshare / delivery | Car running costs (apportioned for business use), platform fees, fuel, tolls, car cleaning, phone bill |
| Online selling (Etsy, eBay) | Cost of goods sold, packaging, postage, platform fees, photography equipment, marketing |
| Freelance / consulting | Subscriptions to professional tools, training, home office costs, internet, computer depreciation |
| Airbnb / short-stay hosting | Cleaning, linen, utilities (apportioned), platform fees, insurance, repairs and maintenance |
| Content / influencer | Camera and lighting gear (depreciated), editing software, props, travel for content |
Keep receipts and a logbook for vehicle use. Mixed personal/business expenses (your phone, your car, your home internet) need a sensible apportionment — the ATO will accept reasonable percentages backed by records.
Two things changed the game. First, the ATO's data-matching programs now ingest information from banks, payment processors, online marketplaces and rideshare platforms. Second, the Sharing Economy Reporting Regime (SERR), which from 1 July 2024 obliges platforms like Airbnb, Uber, Etsy, eBay, Amazon Australia and food delivery apps to report seller and host income directly to the ATO.
The practical consequence: if you earn $4,000 selling on eBay this year and don't declare it, there's a strong chance the ATO already has the data and will eventually match it against your return. The cost of getting caught — back taxes plus interest plus penalties — is much higher than the cost of declaring upfront.
If your side hustle income lifts your total income enough, the ATO will put you into the PAYG instalments system. You pay tax on your business income quarterly through the year rather than in one lump at tax time. This is a cash flow tool, not extra tax — it just spreads the bill. Most people prefer it once they've experienced one tax bill where they owed several thousand at the end of the year.
Disclaimer: This guide provides general information about Australian tax rules for side hustle income and is not financial or tax advice. Individual circumstances vary significantly. Refer to the official ATO website and consult a registered tax agent for advice tailored to your situation.