2nd Job and your tax impact

Side Gig Taxes Explained: Essential Tips to Maximise Your Refund

Having a side gig (2nd Job) can be a good way to boost your income, explore your passions, or even prepare for running a full-time business. But with extra income comes extra tax obligations, and it’s important to know how to manage them properly to avoid issues and maximise your refund.  Let's walk you through how side gigs affect your taxes, common tax deduction traps, and expert tips for ensuring you stay compliant with the Australian Tax Office (ATO).

Index

1. What Counts as a Side Gig?
2. Income Reporting Obligations
3. Claiming Tax Deductions for Your Side Gig
4. Tax Deduction Traps to Avoid
5. GST Registration for Side Gigs
6. Superannuation and Your Side Gig
7. Maximise Deductions with the Gotax Deduction Grabber App
8. Expert Tax Advice for Side Gigs

What Counts as a Side Gig?

A side gig refers to any form of work or small business you take on in addition to your regular employment. Examples include:

• Ride-share driving (e.g., Uber, DiDi)
• Freelancing (e.g., writing, graphic design)
• Selling products online (e.g., Etsy, eBay)
• Delivering food (e.g., Uber Eats, Deliveroo)
• Tutoring or personal training

Regardless of how much you earn, the ATO considers all side gig income as taxable. You need to report this income on your Gotax Online Income Tax Return and take advantage of tax deductions where applicable.

Income Reporting Obligations

Any money you earn from your side gig must be declared to the ATO. Whether it’s income from freelancing, selling products, or providing services, proper income reporting is crucial.

Example:
Jane makes $10,000 a year from freelance graphic design. This income must be reported on her tax return, and she’ll pay tax at her marginal tax rate.

Failing to report this income can lead to penalties, so make sure to keep accurate records of all invoices, receipts, and bank statements.

Claiming Tax Deductions for Your Side Gig

One of the perks of a side gig is the ability to claim tax deductions for tax expenses related to earning your income. Eligible tax expenses might include:

• Office supplies
• Internet and phone bills
• Travel expenses
• Equipment and software

Example:
Mark, a part-time photographer, can claim tax deductions for his camera gear, editing software, and travel costs for photoshoots.
However, only expenses directly related to the gig and not for personal use are tax deductible.

Tax Deduction Traps to Avoid

It’s tempting to think everything related to your side gig is tax-deductible, but that’s not the case. Avoid these common traps:

1. Personal vs. Business Use
If you use something like your car or phone for both personal and business purposes, only the business portion is tax deductible. For example, you can’t claim the full phone bill if you also use it for personal calls.

Example:
Tax Deductible: Kilometres driven for ride-share passengers.
Not taX Deductible: Personal trips to the grocery store.

2. Home Office Expenses
If you work from home, you may be able to claim a percentage of your home office expenses as a tax deduction. This can include a portion of your electricity or internet bill, but only if it’s genuinely used for business.

GST Registration for Side Gigs

If your side gig earns more than $75,000 annually, you must register for Goods and Services Tax (GST). This involves charging GST on your sales, lodging regular Business Activity Statements (BAS), and remitting the GST to the ATO.

Example:
Sarah, who sells handmade jewellery online, earns more than $75,000 annually. She’s required to register for GST and charge an additional 10% on all sales.

Superannuation and Your Side Gig

If you’re self-employed, contributing to your superannuation is entirely up to you. By making regular contributions, you can build your retirement savings and even claim tax deductions on super contributions.

Example:
Tom, a freelance writer, contributes $5,000 to his super fund and can claim this as a tax deduction, reducing his taxable income.

Maximise Deductions with the Gotax Deduction Grabber App

Tracking expenses for your side gig can be a hassle, but the Gotax Deduction Grabber App makes it easy. This app helps you manage all your business expenses with a built-in logbook and tracking system for quick tax deduction claims.

Scan the QR code below to download the Gotax Deduction Grabber App today and start optimising your tax

deductions!

Expert Tax Advice for Side Gigs

Tip: Always separate your personal and business finances. Opening a dedicated bank account for your side gig helps streamline your bookkeeping and provides clear records in case of an audit.

If you’re serious about maximising your tax refund, consider pre-paying expenses before the end of the financial year or buying necessary equipment to take advantage of immediate tax deductions.

Conclusion

Managing taxes for your side gig can feel complicated, but with the right knowledge and tools, you can stay on top of your obligations and make the most of your deductions. Use the Gotax Deduction Grabber App to simplify your record-keeping and ensure you're getting every deduction you're entitled to.

Gotax, Online Tax Experts. Maximise your Refund… 2024 Complete Return $55, Simple Return $15. Small Business $120, Rental $99+.

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