When Does a Side Hustle Become a Business for Tax Purposes?

A side hustle becomes a business for tax purposes when you operate with the intention to make a profit, provide goods or services regularly, and conduct your activities in an organised way. This is true even if you still have a full-time job. Once your side income shows business-like behaviour, the ATO expects it to be reported as business income, not “extra money.” That usually means registering for an ABN and completing the Small Business Schedule in your individual tax return. Waiting too long to make the switch is one of the most common mistakes the ATO sees.

When Does a Side Hustle Become a Business for Tax Purposes?

Many people start earning money on the side without thinking of themselves as “in business.”
That’s normal.

What catches people out is assuming the ATO sees it the same way.

The ATO doesn’t care what you call your side hustle — it looks at how you operate.

The ATO’s Business Indicators 

Your side hustle is likely considered a business if you:

• Intend to make a profit (even if you haven’t yet)

• Earn income on a regular or repeated basis

• Advertise or promote your services

• Invoice clients or receive platform payments

• Keep records and track expenses

• Operate in an organised, business-like way

You don’t need to tick every box.
But the more that apply, the clearer the answer becomes.

Common Triggers That Change Everything

These are the moments where people accidentally cross the line:

• Your side income becomes consistent, not occasional

• Clients start finding you through referrals or platforms

• You begin charging market rates

• You buy tools, equipment, or software to support the work

• Platforms like Uber, Airtasker, or Etsy start reporting your income

At this point, continuing to declare the income as “other income” is risky.

What Changes Once It’s a Business

Once your side hustle is considered a business:

• You should have an ABN

• Income must be reported in the Small Business Schedule

• Only business-related expenses are deductible

• Record-keeping becomes critical

• GST registration may apply if turnover approaches $75,000

This doesn’t mean more tax — it means correct tax.

Why People Get This Wrong

Most mistakes happen because:

• “It’s just extra money”

• “I only do it sometimes”

• “The platform already reports it”

The ATO sees all of this data.
What they expect is that you classify it correctly.

How GoTax Makes This Simple

GoTax is built for people in this exact grey zone.

The system:

• Identifies when income should be treated as business income

• Guides you through the Small Business Schedule

• Helps separate business income from employment income

• Keeps everything clean and compliant

No guessing. No late fixes.

What's Next?

If your side hustle looks like a business, earns like a business, and operates like a business — the ATO treats it as one.

The safest move is to recognise the shift early and report it properly.

More questions? Just ask gotax.com.au