The gig economy and declaring income on your tax return

[Fresh Bread]

Hi all,

I've recently started picking up little courier jobs posted on an online jobs board as a side hustle. This week I'm bringing in over $200. 3 jobs I did while I was making trips in the same direction so minimal hassle and expenses (a bit like only picking up Uber fares if they are going your way). Tomorrow's is more like a few hrs work but should be fun.

I know any income should be declared for tax but in reality, what would your threshold be before you thought "this is a stream of income" and put it on your tax return? Do you declare any income from ebay, gumtree?

I'm thinking I should just total what I've made next June and make the call then. I did do reselling on ebay fairly seriously at one point and I declared that even though it made only a couple of $k.

[mjr]

If the income is being channeled to you through any business or other entity that the ATO can interrogate, you must assume they'll know about your side hustle.

Unless you're anonymous and you're paid in cash, the ATO's data matching algorithms will identify you.

[middo]

I agree.  Unless it is $cash (and not a transfer or electronic payment) you would have to assume that sooner or later it could catch up with you.  My son got audited by Centrelink recently, because his employer declared his income in 2015 to be $0.70 different than his pay slips said.  Be careful.

[Fresh Bread]

I agree.  Unless it is $cash (and not a transfer or electronic payment) you would have to assume that sooner or later it could catch up with you.  My son got audited by Centrelink recently, because his employer declared his income in 2015 to be $0.70 different than his pay slips said.  Be careful.

Oh that's just a waste of everyone's time! Thanks.

[Papa bear]

Probably not a good idea to post about tax evasion on an Internet forum. 


Sent from my iPhone using Tapatalk

[Fresh Bread]

Probably not a good idea to post about tax evasion on an Internet forum. 


Sent from my iPhone using Tapatalk

Hobby income doesn't have to be declared so it's a case of when I decide that this is a thing I'm trying to do to make money vs having fun / meeting new people / helping people out.

[NykkiC]

If you are going to be staying around the $200/week mark, I would be declaring it. 10k-ish per year doesn't sound like "oh, I just do it now and then" money (behold my super rigorous metric :P ).
I also think that providing services won't seem all that analogous to ebay, from the ATO's perspective, since ebay revenue could  just be people clearing out clutter with the money being a happy byproduct, whereas regularly providing services that you're charging for looks more, well, mercenary, I guess.
Have you had a browse of the ATO's website? Sometimes government websites have the useful burried in... unintuitive places.

[Fresh Bread]

Yeah, if I keep this up I'll definitely declare it at 10k. But if it ends up fizzling out next week to be honest I will have completely forgotten about it by June.

If I could do 10k a year after expenses that would be a nice little FIRE activity to get me out of the house and meeting people. Some people want stuff delivered interstate for peanuts that would barely cover fuel but I love the thought of jumping in the car for a road trip just because we can :)

[NykkiC]

It sounds like you're thinking of it as a hobby (and a fun one too) but unfortunately government agencies have to make the rules to cover most people, rather than outliers. I'm an ex-public servant whose job involved providing a service and taking the customer phone calls for it, so I'm well aware and sympathetic to how those generalisations don't always line up with a specific circumstance.

Anyway, the question intrigued me so I dusted off the "navigating and interpreting government website" skills and delved into the ATO's and came up with this:

The sharing economy

The sharing economy is a way of connecting buyers and sellers, usually by an app or website.

If you are engaged in the sharing economy, the income and deductions from those enterprises needs to be included on your tax return.

Examples include services such as:

providing taxi travel services through 'ride-sourcing'
renting out a room or house for accommodation
renting out parking spaces
providing skilled services (for example web or trade services)
supplying equipment, tools, etc
completing odd jobs, errands, deliveries, etc.

Source: https://www.ato.gov.au/individuals/income-and-deductions/income-you-must-declare/employment-income/

I also had a look at an info page called Are you in business?, which is under the 'before you get started', because everyone thinks about tax implications before they do something, right? (ah, public service logic).

There is no single factor that determines if you are in business, but some of the factors you need to consider include:

You've made a decision to start a business and have done something about it to operate in a businesslike manner, such as
registered a business name, or
obtained an ABN.
 
You intend to make a profit – or genuinely believe you will make a profit from the activity – even if you are unlikely to do so in the short term.
You repeat similar types of activities.
The size or scale of your activity is consistent with other businesses in your industry.
Your activity is planned, organised and carried out in a businesslike manner. This may include   
keeping business records and account books
having a separate business bank account
operating from business premises
having licenses or qualifications
having a registered business name.

Basically, the ATO isn't staffed by mind readers. They can't know your intentions when performing an activity, all they can do is look at how you go about it and make generalisations as to whether most people doing it the same way as you are likely to be doing it as a hobby or not. Even if you are thinking of it as a hobby because the money is nice but not necessary, it looks to me like the ATO would expect you to declare it (but I'm not a lawyer, accountant or tax official - just an ex-public servant with more experience than I'd like wading through and trying to interpret government websites).

[Fresh Bread]

Yeah, thanks for your research, as I already said, I'll be declaring it if I continue, but if I don't do anymore I probably won't remember this fun week by June. June is 6 months away, I can barely remember what I did a fortnight ago.

For all the rules, I do wonder how many Uber drivers, Airtaskers, Upworkers & Airbnb hosts actually declare their income... I used an Airtasker once who asked me to cancel and pay them cash. Also I have my own business so I know 'how' to report income & expenses but the average person who's normally an employee, I dunno, it might all be too hard.

I use a tax advisor so I'll get advice about this and a whole host of things anyway, depending on what I remember, ha!

[deborah]

With my work, ANY outside activity had to be approved by HR, so each year I submitted the paperwork. It was always approved, but after all that hassle, sorting through it on my tax return was chicken feed. Yes, everything was always declared. It’s amazing what deductions you can get! You will probably find it’s one way to negatively gear your car or whatever you are using for the courier service.