The ATO is warning Aussies to not get caught out this tax time for not declaring income made through their side hustles or freelance work.
It comes as record numbers of people are working multiple jobs to keep up with the rising cost of living.
ATO Assistant Commissioner Tim Loh said if you earn money through repeated activities with the goal of making a profit, then it’s likely you’re considered to be running a business by the tax office.
‘With tax time just around the corner, if you are bolstering your income with new activities, make sure all your records are up-to-scratch,” he said.
“This could be anything from animal breeding to earning income through digital platforms, such as ride share or food delivery, or even online content creation, like social media influencers.”
Mr Loh said “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”.
Some examples he gave were if your home is piling up with stock to sell, or you’re running fitness bootcamps on top of your full-time job.
Even receiving gifts as an online content creator is a sign your side hustle might be turning into a business.
If you are running a business, there a number of obligations you must meet to ensure the tax office can track your earnings.
You will need to register an Australian business number (ABN), keep the right records and lodge the right type of tax return.
You may also need to register for the goods and services tax (GST).
“While there are always new and different ways to make money, the tax obligations remain the same,” Mr Loh said.
“Don’t fall into the trap of forgetting to include all your income thinking the ATO won’t notice.”
The ATO now has sophisticated data-matching and analytical tools to identify taxpayers that under-report their income.
From July 1, the ATO will be able to get access from an ever wide range of electronic distribution platforms.
The tax office will be able to match this information with the information taxpayers provide on their tax return or activity statement and work out if any income has not been included.
Mr Loh is urging businesses to ensure they keep accurate records of their income earned to make it easier to file their tax return next month.