Many Australians earn extra income outside their regular job. You might sell products online, create content for social media or streaming platforms, do freelance work, provide tutoring, walk dogs or turn a favourite hobby into a source of income.
What starts as a side hustle can gradually become something more. The ATO has recently updated its guidance for content creators, but the underlying issue applies much more broadly: at what point does a side hustle become a business?
The answer isn’t always obvious. Not every activity that generates income is a business, and the tax treatment can depend on whether you’re carrying on a hobby, undertaking an income-producing activity or carrying on a business.
When does a side hustle become a business?
A hobby can evolve gradually. Perhaps you started making and selling crafts, posting videos for fun, streaming games, tutoring a student on weekends or selling a few items online.
Over time, you might start advertising your services, investing in equipment, building an audience or customer base, and regularly looking for ways to increase your earnings. An activity that once felt casual can begin to take on a more commercial character.
There’s no single factor that determines whether you’re carrying on a business. Instead, a range of factors may need to be considered, including:
- whether you have an intention to make a profit
- how regularly and consistently you carry on the activity
- the size and scale of the activity
- whether you operate in an organised and business-like way
- whether you keep appropriate records
- whether you are actively working to grow the activity and increase your income.
The overall circumstances are important. Simply earning money from an activity doesn’t automatically mean you’re carrying on a business.
Content creators are a good example
Content creators can earn income in a variety of ways, including advertising revenue, subscriptions, sponsorships, affiliate marketing, digital product sales and brand collaborations.
In some situations, they may also receive products, services or other non-cash benefits in connection with their activities.
As a content-creation activity becomes more established and income-producing, its tax implications can become more complex. The same principles can apply to many other types of side hustles.
Someone who occasionally earns a small amount from a pastime may be in a very different position from someone who actively markets their services, keeps detailed records and is working to build a regular income stream.
What are the tax consequences?
If your side hustle is a business, the income and expenses associated with the business generally need to be dealt with in your tax return.
However, even if you aren’t carrying on a business, that doesn’t necessarily mean amounts you receive are automatically tax-free. Depending on the nature of the activity and the amounts received, there may still be tax consequences.
As a side hustle grows, your practical tax and administrative obligations can also change. You may need to:
- keep more detailed records
- report income in your tax return
- keep records of expenses that may be deductible
- put money aside to cover tax that may become payable
- consider whether you need an Australian business number (ABN)
- consider whether you need to register for GST as your activity grows.
The right treatment will depend on the nature and circumstances of your activity.
What if you earn income from overseas?
It’s also important to remember that Australian tax residents are generally taxed on their worldwide income.
If you earn money through overseas-based platforms or receive payments from overseas businesses, that doesn’t necessarily mean the income falls outside the Australian tax system.
The source of the payment and the location of the platform or business paying you don’t, by themselves, determine whether the income needs to be reported in Australia.
Is your side hustle now a business?
If your side hustle has grown over the past year, it’s a good time to review your situation and make sure you’re keeping appropriate records.
Understanding whether your activity is a hobby, income-producing activity or business can help you avoid unexpected tax consequences and make it easier to meet your tax obligations as the activity grows.
If you’re unsure whether your side hustle is a hobby or a business, contact our office. We can help you understand the tax implications of your particular circumstances and what steps you may need to take next.
20 October 2026