Online’side hustles’ are subject to tax.

Online side hustles can bring you income.

There are many ways that individuals can make money online and receive benefits. It is often known as a taxpayer’s ‘side hustle’, where the taxpayer receives monetary benefits from a skill or passion other than the income from their main job or business.

Examples include:

• An Instagram or TikTok “influencer” was paid cash or in kind to promote brands and products.
• A Youtuber makes money advertising on their channel.
• A website blogger receives commissions for sales of promoted products
• A family can earn rental income by renting their granny apartment listed on Airbnb and Stayz.
• Airtasker allows tradespeople to earn extra handyman fees
• A student can make money by riding-sharing or ordering food.
• A person who sells old household items on eBay, Gumtree, or Facebook Marketplace.
• A person buys wholesale quantities of a product and then sells it on eBay, Gumtree, or Facebook Marketplace.

A separate set of rules is not provided in the Australian tax law for income generated via a web-based interaction. These circumstances do not change the general principles that determine whether an amount of money received for the provision or use of a service or good is assessable. This article is focused on online activities, but the same principles apply to side hustles that are not derived from the internet, e.g., By advertising via leaflets, posters, or word-of-mouth.

The ATO’s data-matching capabilities are greater than ever. It is, therefore, more important than ever that income properly classified as assessable be reported in the taxpayer’s tax return.

General principles of assessment — Business vs. Hobby

Ordinary income is considered assessable income for tax purposes. Refer to ss. 6-5 and 995-1 in the ITAA97. Case law has established the general principles that underlie ordinary income.

What is income from running a business?

The ordinary income of an online business is generally the amount generated during the normal course of running it. This could potentially be:

• The sales revenue of an online retailer;
• Uber driver fares
• Rent received from a host for accommodation on platforms like Airbnb
• Airtasker charges delivery fees.

What is the best way to keep a taxpayer in business?

The definition of business in s. 6(1) is not the same as the ordinary meaning. However, it has a specific meaning:

• This includes, but is not limited to, any profession, trade or employment; and
• Excludes employment as a job.

Whether a taxpayer is operating a business is a matter of fact and degree. The Courts are not bound by any specific legislative definition of “carrying on business”, so they have considered various factors when deciding whether taxpayers are carrying on a business.