Side hustle tax: what you owe on income outside your day job

The awkward truth about side income: it's taxed at your highest marginal rate, because it stacks on top of your salary — and nobody is withholding tax from it as you earn. Get the mechanics right early and a side hustle stays a joy; get them wrong and July delivers a bill you didn't budget for.

The stacking rule

Earn $90,000 in your day job and $10,000 on the side, and that side income is taxed entirely in your 30%-plus-Medicare band — about $3,200 owed, more with a HECS debt (repayment income counts everything). The reliable habit: transfer a third of every side-hustle payment into a separate account the day it arrives. Our income tax calculator's "other income" field shows your exact combined position in seconds.

The ATO already knows

Delivery and rideshare platforms, accommodation sites, and online marketplaces report seller income directly to the ATO under the sharing-economy reporting regime, and bank data-matching covers most of the rest. "It was just cash on the side" hasn't been a strategy for years — declare it all, then claim every deduction it generates.

Hobby or business?

Genuine hobbies (occasional sales, no profit motive) aren't taxable — but regularity, marketing, and profit intent make it a business fast. If it's a business: get a free ABN, report the income (with deductions) in your return, and after your first tax bill expect the ATO to move you onto PAYG instalments — quarterly prepayments so the next bill doesn't arrive all at once.

The $75,000 GST line

Cross $75,000 of business turnover in a rolling 12 months and GST registration is mandatory: 10% added to invoices, quarterly BAS lodgements. (Rideshare drivers must register from the first dollar.) Below the line, registration is optional and usually not worth the admin.

Deductions cut both ways

Every cost of earning the side income is deductible against it: platform fees, materials and stock, the work share of phone, internet and vehicle, insurance, software, a proportion of home running costs. A delivery rider's bike and phone mount, a freelancer's software stack, a market stallholder's site fees — all reduce the taxable side profit, at the same marginal rate the income is taxed at.

If the side hustle is becoming the main event, the contractor vs employee calculator shows what your effective "salary" really is once expenses and self-funded super are counted. General information only — not tax advice.