The Australian Taxation Office (ATO) is reminding taxpayers once again to properly identify if they are ‘in business’ and to declare all sources of income when lodging their tax return this year.
The reminder comes as record numbers of taxpayers are working multiple jobs or supplementing their income with side hustles or gig economy activities.
ATO Assistant Commissioner Tim Loh explained that if a taxpayer earns money through continuous and repeated activities for the purpose of making a profit, then it’s likely they are running a business.
“While there are always new and different ways to make money, the tax obligations remain the same,” Loh said. “Don’t fall into the trap of forgetting to include all your income thinking the ATO won’t notice. You also need to declare any additional income earned through that side hustle.”
In conjunction with the call out, the ATO is running an advertising campaign to remind taxpayers about their obligations if their side hustle is generating income.
“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,” Loh 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. If your home has become more like a warehouse and is stocked to the hilt with goods to sell, then you may in fact be running a business.
“If you’re running bootcamp sessions, in addition to your 9-5 job, well this is a side hustle and you need to declare this income to the ATO,” Loh added. If you’re an online content creator earning money or receiving gifts, you’re also likely to be running a business and there are tax obligations you need to comply with.”
Loh acknowledged the difficulties of identifying if one is in business, saying that it’s sometimes hard to tell if you’re ‘in business’ and that the ATO recognises not everything you do to make money is considered a business.
“The ATO won’t consider activities as ‘in business’ when they are a one-off transaction (unless it is the first step in carrying on a business or intended to be repeated) or an activity from which you don’t seek to make a profit,” he said.
The ATO has also improved on their data-matching and analytical tools to identify taxpayers that under-report their income with its Shared Economy Reporting Scheme set to commence on 1 July 2023. Under this scheme, the ATO will receive data from more electronic distribution platforms and will match this information with the information taxpayers provide on their tax return or activity statement to identify income that has not been included.
“It doesn’t matter whether you are carrying on a business or simply earning additional income through a digital platform, such as a website or even an app, you must keep accurate records of your income and include it in your tax return,” Loh said. “Every dollar dodged is a dollar that can’t be used for vital services like health and education.”
“The ATO needs to ensure there is a level playing field for everyone, with no unfair advantages,” he concluded.
