ATO Scrutinises Side Hustles Undeclared Income

The ATO’s latest advertising campaign serves as a warning that YouTubers, Uber drivers, and influencers will be specifically targeted by their data analytics software in a rigorous crackdown on side hustles undeclared income. With the growing number of taxpayers involved in multiple jobs or engaged in side hustles and gigs, the ATO emphasises that these activities will not go unnoticed.

The ATO has highlighted a significant rise in the number of taxpayers who are now juggling multiple jobs or generating additional income through side hustles and gigs. 

Data Matching and Compliance – Side Hustles Undeclared Income

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Starting July 1st, the ATO will commence receiving data from ride-share and accommodation platforms as part of the Sharing Economy Reporting Regime. This data will be matched against taxpayer returns. 

Regardless of whether individuals are conducting a business or earning supplemental income through digital platforms like websites or apps, it is imperative to maintain accurate records of their earnings and ensure they are included in their tax return, according to Assistant Commissioner Tim Loh.

The ATO’s advertising campaign is centred around cautioning taxpayers to report income derived from side hustles. The campaign emphasises that although there may be constantly emerging and diverse methods of earning money, the tax obligations remain unchanged. Taxpayers are advised not to underestimate the ATO’s ability to detect side hustles undeclared income and to ensure that all earnings are accurately declared.

“If you are bolstering your income with new activities, make sure all your records are up-to-scratch. This could be anything from animal breeding to earning income through digital platforms such as rideshare or food delivery, or even online content creation, like social media influencers,” he said.

“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 nine-to-five job, well this is a side hustle and you need to declare this income to the ATO.”

“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.”

Mr. Loh added that a hobby transforms into a business when there is a clear intention to earn a profit, and the activity is deliberately planned and organised to achieve that objective.

The ATO distinguishes that one-off transactions, unless they serve as the initial step towards conducting a business or are intended to be repeated, and activities that are not aimed at generating a profit, will not be considered as being “in business.”

Taxpayers who engage in continuous and repetitive activities with the purpose of making a profit are likely operating a business and are required to maintain appropriate records, according to the ATO. The office further explains that businesses, depending on their structure and turnover, have various obligations such as registering for an ABN, keeping accurate records, filing the appropriate type of tax return, and potentially registering for GST.

Seek Expert Advice

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As the ATO intensifies its focus on side hustles and undeclared income, individuals with side hustles should take this campaign as a reminder to ensure compliance with their tax obligations. The increased scrutiny and data matching capabilities mean that those earning additional income through platforms like ridesharing, digital services, or online content creation must accurately report their earnings and maintain thorough records. Failure to do so could result in penalties and legal repercussions. 

If you need advice on managing your finances and navigating the complexities of taxation, it is recommended to seek professional assistance. Consulting with experts like BloomWealth can provide the necessary guidance and expertise to help you meet your financial obligations effectively and ensure long-term financial well-being.

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