Side hustles are everywhere right now. Whether you're driving for a delivery app, selling handmade goods online, freelancing after hours or renting out a room, that extra money is generally taxable just like your day job. The good news is that with a little organisation, handling it at tax time is straightforward.
Yes, side income is taxable
Money you earn from a side activity is generally assessable income and must be declared on your tax return, even if it's paid in cash or through an app. There's no special exemption just because it's a side gig rather than a main job.
The ATO receives data directly from many platforms, including ride-share, delivery, online marketplaces and short-stay rental sites. That information is matched against what you report. Declaring everything properly from the start is far easier than explaining a discrepancy later.
Keep good records all year
The single best habit you can build is keeping a simple, ongoing record of what you earn and what you spend to earn it. You don't need fancy software to begin, just consistency.
- Save the income summaries or statements each platform gives you.
- Keep receipts for anything you buy for the activity.
- Note the date, amount and purpose of each expense.
- If you use something for both private and work purposes, record the work-related portion.
Good records mean you can claim the deductions you're entitled to with confidence, rather than guessing or missing out.
What you may be able to claim
Genuine expenses connected to earning your side income may be deductible, which reduces the tax payable on that income. What you can claim depends entirely on the activity, but common examples include:
- The work-related portion of your car, phone and internet.
- Tools, equipment or materials used for the activity.
- Fees, commissions or subscriptions charged by the platform you use.
For car expenses, you can generally use the cents-per-kilometre method at 88c per kilometre for 2025-26 (capped at 5,000 business kilometres), or keep a logbook to claim your actual running costs. For your home workspace, the fixed-rate method for 2025-26 is 70c per hour. The key in every case is that the expense must genuinely relate to earning the income, and you need records to back it up.
Hobby or business?
Not every side activity is a business in the eyes of the ATO. A genuine hobby is generally not taxable and can't claim deductions. The line between a hobby and a business comes down to things like whether you intend to make a profit, how regularly and commercially you operate, and whether you repeat the activity in a business-like way.
This distinction matters, because it changes how you report the income and what you can claim. If you're not sure which side of the line you fall on, it's worth getting it checked rather than assuming.
When you might need an ABN or GST
If your side activity is a genuine business rather than a hobby, you may need an Australian Business Number (ABN). An ABN is free to apply for and lets you operate properly as a business.
Separately, once your business turnover reaches $75,000 in a 12-month period, you generally must register for GST and charge 10% GST on your sales. There's an important exception: if you drive for a taxi or rideshare service, you must register for GST from the very first dollar, regardless of turnover. If you're approaching these thresholds, plan ahead so registration doesn't catch you off guard.
Set money aside as you go
Because tax usually isn't withheld from side hustle income, it's wise to put some of each payment aside so you're not surprised by a bill. A simple separate savings account works well. How much to set aside depends on your overall income and marginal tax rate, so it's worth doing a rough estimate early rather than guessing.
How we can help
A side hustle should add to your income, not your stress. We can help you work out whether your activity is a business or a hobby, identify the deductions you're entitled to, sort out ABN or GST registration, and make sure everything is reported correctly on your 2026 return.
Book a chat at nebulaaccounting.au or call 0433 822 227.
This article is general information only and does not take account of your personal circumstances — it is not personal tax, financial or legal advice. Tax laws change and apply differently to different people. Nebula Accounting Pty Ltd is a registered tax agent (No. 26259377); please speak with us or check with the ATO before acting.