In recent years, the rise of the gig economy has transformed how Australians earn money. From food delivery and rideshare driving to freelance graphic design and online tutoring, side hustles are now part of everyday life. However, with the Australian Taxation Office (ATO) ramping up its surveillance on undeclared income, it’s no longer enough to treat side gigs as “extra cash.” If you're earning from a side hustle, it’s crucial to understand how this crackdown impacts you — and how to stay compliant under Financial Services and Tax Law.

Why Is the ATO Targeting Side Hustles?

The ATO has observed a growing number of Australians engaging in side hustles without reporting their income. With the rise of digital platforms and informal cash jobs, many assume this type of income goes unnoticed — but the ATO is now using data matching, digital footprint tracking, and platform reporting to identify unregistered and undeclared income streams.

ATO Assistant Commissioner Tim Loh stated, “If you’re earning money outside of your main job, it’s likely you have tax obligations — even if it’s just a few hundred dollars.”

The message is clear: if you’re earning money, you need to declare it.

What Counts as a Side Hustle?

A side hustle includes any activity that generates income outside your regular employment, such as:

• Rideshare or food delivery (Uber, DoorDash)
• Freelance services (design, writing, consulting)
• Online selling (eBay, Etsy, Facebook Marketplace)
• Influencer partnerships or affiliate marketing
• Short-term rentals (Airbnb)
• Dog walking, babysitting, or odd jobs

Whether you consider your gig a business or a hobby, the ATO treats all assessable income as taxable.

Key Tax Responsibilities for Side Hustlers

Here’s what you need to do if you’re earning through a side hustle:

Declare All Income Even if you’re paid in cash, income from side jobs must be reported in your annual tax return. This includes one-off jobs, digital platform earnings, and non-cash payments like barter or goods.

Register for an ABN If you’re operating as a sole trader or business, you’ll likely need an Australian Business Number (ABN). This helps classify your activity for tax purposes and enables you to invoice clients legally.

Keep Proper Records Maintain invoices, receipts, and bank statements. ATO audits are increasingly focused on digital transactions, so accurate records are your best protection.

Understand GST Obligations If your side hustle earns over $75,000 per year, you must register for GST. This threshold includes combined income from all your business activities.

Claim Legitimate Deductions You may be eligible to claim expenses related to your side hustle — such as software subscriptions, internet costs, or travel. However, only the business-use portion is deductible.

What Happens If You Don’t Comply?

Failing to declare income can result in:

• Hefty fines and penalties
• Back taxes with interest
• Audits and reputational damage

The ATO is particularly focused on individuals who fail to report income after previously being warned. Data-matching agreements with platforms like Uber, Airtasker and eBay mean fewer people can fly under the radar.

For example, someone who earns $10,000 a year from rideshare driving and doesn’t declare it could face thousands in fines and interest — even if they didn't realise it was required.

How Financial Services and Tax Law Helps You Stay Compliant

Understanding your rights and responsibilities under Financial Services and Tax Law ensures you manage your side income legally and efficiently.

Qualified tax and legal professionals can help you:

• Determine whether your side gig is a business or hobby
• Identify what income needs to be declared
• Maximise your allowable deductions
• Register for an ABN or GST if needed
• Respond to ATO queries or investigations

Whether you’re just starting a side hustle or managing multiple income streams, legal advice helps you avoid costly mistakes and gives you peace of mind.

Don’t Let the ATO Catch You Off Guard

Many Australians aren’t trying to cheat the tax system — they simply don’t know their obligations. But ignorance is no defence when it comes to tax. If the ATO finds discrepancies, you could be facing fines, repayment demands, or worse.

To stay ahead:

• Use accounting apps to track income and expenses
• Consult a tax lawyer or accountant before tax time
• Check the ATO’s guide to declaring extra income
• Be proactive, not reactive

The ATO’s crackdown on side hustles is a reminder that tax compliance is not optional — even for informal or part-time income. With advanced tracking tools and expanded data-sharing agreements, the ATO is more equipped than ever to detect unreported income.

Side hustles can provide flexibility, freedom, and financial growth — but only when managed correctly. Understanding your tax obligations under Financial Services and Tax Law is key to avoiding legal trouble and maximising your earnings.

Contact New South Lawyers today for expert legal advice and protect your financial future with confidence.