Do you have a side hustle? Whether it was the downtime during covid or the need to supplement the household income, side hustles have grown in 2021. Having multiple streams of income is a good idea, however, it is extremely important to make sure you are recording this business income and reporting it to the ATO in your tax return.
The ATO is paying close attention to households with a secondary income. Any additional income from your side business is taxable income. This means that every dollar of profit you make will count towards your taxable income, and you will be taxed on this. It is important yourself or a bookkeeper records your business income and expenses to declare on your income tax return.
What income do you need to declare?
You must declare all forms of taxable income including income but not limited to income you receive from your employment (job), pensions, annuities, government taxable payments, investment income, rental income, business income , capital gains on sale of assets and foreign income.
What happens if you don’t declare your income?
The taxpayer is generally liable for tax on the undeclared income plus interest charges and penalties, which can be significant.
What if your turnover exceeds $75 000?
Don’t forget you will need to register for GST if your business turnover is set to exceed $75000 in the financial year. This 10% GST is added on to all your taxable sales and then needs to be paid to the ATO every quarter, noting that you can deduct any GST paid on business purchases.
Need help tracking your sales?
There are a variety of accounting software packages such as Xero and MYOB to help you manage these business transactions, and help you report your sales and purchases quarterly (if registered for GST) or annually to the ATO in your tax return. However, if you aren’t too savvy with accounting, consider getting a professional bookkeeper to do the job.
Aspect Accountants and Advisors have over 15 years’ experience managing small business accounting and tax requirements. Give us a call for a FREE initial consult to discuss your accounting needs