Insights

Side hustles are everywhere, but the tax rules are simple in principle: if you earn money (or valuable non-cash benefits), the ATO generally expects you to declare it. In 2026, what’s continuing to change for many people is visibility. The ATO is continually expanding their data sources through mandatory platform reporting, so getting it right will avoid dealing with an ATO follow‑up later. Uber, Airbnb, PayPal and eBay have been reporting data for several years and additional platform sources are being added every year.

What you must declare (the ATO basics)

You generally need to include all side hustle income in your tax return, including:

• Platform income (rideshare, delivery, task apps, online selling, short‑term rentals, renting out assets, providing services online).
• Cash payments (cash is still income and must be declared).
• Non‑cash perks (goods/services instead of money), usually declared at market value. Quick example: If you’re paid with free products for promotion or services, that value may still count as income.

The only exception is for income generated from activities that do not have a profit-making intention (hobbies). This income is not required to be reported. A great example of this is a model train enthusiast who decides to sell one or more of their collections to free up space for new acquisitions – the sale proceeds are generally excluded as the trains were not originally purchased with a view to selling for a profit later. Depending on how you are paid, the income may still be included in an ATO review but if this type of situation can be proven, the income would not be assessable.

Why 2026 is different: most platforms are reporting

The ATO’s sharing economy guidance confirms income earned through digital platforms needs to be reported and describes their compliance approach. If the ATO find income from relevant activities, and income has not been reported, they can and will amend tax returns to include omitted income. However, they won’t include any allowance for costs incurred in the generation of that income.

Takeaway: declare everything, then focus on claiming what you’re entitled to.

What you can claim (without overclaiming)

You can generally claim deductions for expenses that are directly related to earning your side hustle income, provided you have records. Common examples include:

• Work‑related portion of phone/internet
• Platform fees/commissions
• Tools/equipment used to earn income (business portion of use only)
• Eligible home‑based work and work-related travel costs, where substantiated

Two rules that save headaches:

1. Keep evidence to help support your claims (receipts/detailed logs for anything with a business use portion).
2. Split personal vs business use (claim only the business portion – personal use is not claimable).

PSI rules: important for freelancers and consultants

If your side hustle income comes mainly from your personal skill or effort, it may be Personal Services Income (PSI). When PSI rules apply, they can change how income is reported and limit some deductions, even if you operate through a company or trust.

If you’re contracting or consulting, PSI is worth checking early, not at tax time.

ABN and GST: the two thresholds people miss

• If you’re operating like a business, you may need an ABN.
• Additionally, If your annualised turnover meets or exceeds $75,000, GST registration may be required.

The “clean and simple” 2026 checklist

If you’ve started or scaled a side hustle and want to avoid a surprise bill while maximising legitimate deductions, email or phone your Altitude accountant, or contact us to book an introduction meeting. We’ll help you confirm what to declare, what you can claim, and how to keep records that stand up to ATO expectations.