# Side Hustle Tax: When Extra Income Needs Declaring > Work out whether money from a side hustle goes on your tax return, why tax usually isn't withheld, and how much to put aside each time you're paid. Canonical HTML: https://getclova.com/blog/side-hustle-tax Clova is an Australian budgeting app. [Join the waitlist](https://getclova.com/) [Home](https://getclova.com/) → [Guides](https://getclova.com/blog) → [Life costs](https://getclova.com/blog/topic/life-costs) → [Side Hustle Tax: When Extra Income Needs Declaring](https://getclova.com/blog/side-hustle-tax) - Author: Marnix - Published: 2026-10-06 The money from walking dogs on the weekend, selling prints online or doing a few design jobs usually arrives without tax taken out. That feels great until you wonder whether the tax office expects a share. It usually does, and most side income simply joins your wages on the tax return you already lodge. What catches people out is the timing: the tax may fall due long after the payment arrives. ## Most side income goes on your tax return A **side hustle** is paid work you do on top of your main job. The ATO sorts it into one of three kinds, and the kind decides what you do at tax time. Three kinds of side money. | | A business | Paid work on the side | A hobby or your own things | | --- | --- | --- | --- | | What it looks like | Regular, planned and for profit | Earning, but not run as a business | For enjoyment, or selling what you no longer use | | Goes on your tax return | Yes | Yes | No | | Costs of earning it can be claimed | Yes | Yes | No | | ABN and GST registration | Can apply | No | No | Based on the ATO's guidance on side hustles and online selling, November 2026. Most side hustles sit in the first two columns. Being a business adds registrations such as an ABN, and GST once turnover is high enough; our guide to [whether you need an ABN](/blog/do-you-need-an-abn) covers that side of it. The third kind is the only one that's left off. A **hobby** is something you do mainly for enjoyment, even if it brings in the odd sale. Clearing out your wardrobe on Marketplace counts here too, because those things were bought for your own use, not to sell. Buying things in order to resell them is different. ## When a side hustle counts as a business There's no single test or dollar amount. The ATO looks at the whole picture, and a side hustle looks more like a business when you're doing it to make a profit, doing it regularly and running it in a planned, organised way. Advertising, keeping track of stock or setting a weekly schedule all point that way. Being small doesn't stop it being a business. A one-off job usually isn't a business. Neither is something you do with no aim of making a profit, like a free weekend fitness group where friends chip in for equipment. If that group starts charging a set price per session, it has changed. If you're not sure which kind yours is, the ATO's [are you in business?](https://www.ato.gov.au/businesses-and-organisations/starting-registering-or-closing-a-business/starting-your-own-business/are-you-in-business) guides walk through examples for selling online and creating content. Both business income and other taxable side income go on your return. ## Tax usually isn't taken out Your employer withholds tax from each pay, so your wages arrive with most of their tax already paid. Independent side income usually arrives without tax withheld. The tax on it is worked out when you lodge your return, after the end of the financial year on 30 June, and it's added to whatever your job's withholding didn't cover. Side profit is added above your wages and taxed in the brackets it reaches, usually with the 2% Medicare levy as well. Your **marginal rate** is the income-tax rate on your next dollar. Here's a made-up example. Ava earns $75,000 a year plus super in her job. On weekends she walks dogs and minds pets through an app, and over 2026–27 that brings in $6,000. What Ava's dog walking leaves her (AUD, 2026–27): | | Amount | | --- | ---: | | Paid by her clients | $6,000 | | Costs of earning it | $1,000 | | Profit | $5,000 | | Tax and Medicare at 32%, due when she lodges | $1,600 | | Hers to keep | $3,400 | Ava is made up. 2026–27 resident tax rates and the 2% Medicare levy. Ava's job already uses her tax-free threshold, so none of the $5,000 profit is tax-free. Her total income of $80,000 sits in the 30% bracket, and with Medicare that makes 32 cents of each dollar of profit. If she spent the whole $6,000 through the year, the $1,600 would arrive as a bill. Our guide on what to do if you [can't pay a tax bill](/blog/cant-pay-tax-bill) covers that situation, but setting it aside as she goes avoids it. ## How much to put aside The simplest habit is to move a share of each payment into a separate savings account the day it lands. The share depends on your total income for the year, your wages and side profit together. | Your total income for 2026–27 | Put aside from each $100 of profit | | ----------------------------- | ---------------------------------: | | Up to $45,000 | about $25 | | $45,001 to $135,000 | $32 to $34 | | $135,001 to $190,000 | $39 | | Over $190,000 | $47 | These are rough buffers, before HELP repayments, surcharge changes or income-tested payments. The first row is rounded up and the second allows for the low income tax offset, a tax reduction that shrinks as income rises. A reduced Medicare levy can also change the amount on low incomes. If you have a HELP debt, side profit also counts towards your repayment income, and our [HECS-HELP guide](/blog/hecs-debt) explains the repayment rates. You can put the share aside from what clients pay you, or from profit once costs come off. Setting it aside from the full payment is simpler, and anything left over once your return is done is yours to keep. If your income moves around from month to month, [budgeting on an irregular income](/blog/budgeting-irregular-income) shows how to plan around the quieter months too. Clova puts each transaction in a category, so you can see side payments and the costs of earning them apart from your everyday spending. A savings goal for the tax share tracks what you've put aside. Clova is an Australian budgeting app. Join the waitlist and we’ll be in touch. [Join the waitlist](https://getclova.com/) ## Keep a record as the money comes in A record of what came in and what it cost to earn makes tax time quicker, and it's what lets you claim those costs. Keep the date, amount and who paid for each payment, and a receipt for each cost. Platform statements help, but cash and bank transfers need noting yourself. The ATO's [records you need to keep](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/records-you-need-to-keep) covers how long to hold on to them. Only the costs of earning the side income count. For Ava, that's the app's fees, a few leads and the treats she carries; her own dog's food isn't. Where something is used for both, such as your phone, you claim the work share. Our guide to [tax deductions](/blog/tax-deductions) goes through how that split works. ## When the side hustle grows Two things change as side income gets bigger. Once a tax return shows $4,000 or more of business and investment income, and [enough tax on it](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/starting-payg-instalments), the ATO can move you onto **PAYG instalments**: smaller payments during the year towards the next bill, instead of one amount at the end. The ATO tells you by sending an instalment notice. And a business has to [register for GST](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/registering-for-gst) when combined business sales reach, or are expected to reach, $75,000 over 12 months, or straight away if it carries passengers through a rideshare app. Moving the tax share when you're paid is a useful place to start. ## A note from us We are building Clova, a budgeting app for planning the money left after tax. ## Common questions ### How much can I earn from a side hustle before paying tax? There's no separate tax-free amount for a side hustle. The $18,200 tax-free threshold covers your total taxable income for the year, so side profit is added above your wages and taxed in the brackets it reaches. ### Do I pay tax on things I sell on Marketplace or eBay? Not when you're selling your own unwanted things that you bought for personal use. The ATO treats that as a casual sale, not income. Buying things to resell, or making things to sell regularly, is different and usually needs declaring. ### Will the ATO know about my side hustle income? Often, yes. Since 1 July 2024, digital platforms that pay people for rides, short stays, deliveries and many other services report those payments to the ATO twice a year, and the ATO matches them against tax returns. Cash and direct bank payments still need declaring even when no platform reports them. ### Do I need an ABN for a side hustle? Only if the side hustle is a business. A business is entitled to an ABN, and some clients won't pay without one. Paid work on the side that isn't a business still goes on your tax return, but you don't register for an ABN or GST for it. ### Do I need a separate tax return for my side hustle? No. Side income goes on your one individual tax return. In myTax there's a section for business or sole trader income, and other side income and its costs have their own places too. ## Sources 1. [Are you in the business of online selling?](https://www.ato.gov.au/businesses-and-organisations/starting-registering-or-closing-a-business/starting-your-own-business/are-you-in-business/are-you-in-the-business-of-online-selling) · Australian Taxation Office 2. [Are you in business?](https://www.ato.gov.au/businesses-and-organisations/starting-registering-or-closing-a-business/starting-your-own-business/are-you-in-business) · Australian Taxation Office 3. [Joined the bustle of a side hustle?](https://www.ato.gov.au/media-centre/joined-the-bustle-of-a-side-hustle) · Australian Taxation Office 4. [Business, partnership and trust income](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/income-you-must-declare/business-partnership-and-trust-income) · Australian Taxation Office 5. [Tax rates: Australian residents, 2026–27](https://www.ato.gov.au/tax-rates-and-codes/tax-rates-australian-residents) · Australian Taxation Office 6. [Low income tax offset](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/tax-offsets/low-income-tax-offset) · Australian Taxation Office 7. [Medicare Levy Act 1986, law in force 1 July 2026](https://www.legislation.gov.au/C2004A03351/2026-07-01/2026-07-01/text/original/epub/OEBPS/document_1/document_1.html) · Federal Register of Legislation 8. [What is the SERR?](https://www.ato.gov.au/businesses-and-organisations/preparing-lodging-and-paying/third-party-reporting/sharing-economy-reporting-regime/what-is-the-serr) · Australian Taxation Office 9. [Starting PAYG instalments](https://www.ato.gov.au/businesses-and-organisations/income-deductions-and-concessions/payg-instalments/starting-payg-instalments) · Australian Taxation Office 10. [Registering for GST](https://www.ato.gov.au/businesses-and-organisations/gst-excise-and-indirect-taxes/gst/registering-for-gst) · Australian Taxation Office 11. [Records you need to keep](https://www.ato.gov.au/individuals-and-families/income-deductions-offsets-and-records/records-you-need-to-keep) · Australian Taxation Office ## Related reading - [How to budget when your casual income changes](https://getclova.com/blog/budgeting-irregular-income) - [Your First Tax Return in Australia: What to Gather and How to Lodge](https://getclova.com/blog/first-tax-return) - [Tax Deductions Explained for Your First Few Years of Work](https://getclova.com/blog/tax-deductions) [Report a correction](https://getclova.com/contact) This guide explains a budgeting method in general terms; it doesn't consider your circumstances.