Tax on a Side Hustle: Uber, Airbnb and the Gig Economy Explained

If you provide a service or rent out an asset through a digital platform for a fee, that money is assessable income and needs to be reported in your tax return. This is true whether you do it full time or just now and then, and whether or not the platform withheld any tax. Under the sharing economy reporting regime, platforms send your income data to the ATO. Rideshare and short term accommodation platforms have reported since 1 July 2023, and other platforms such as food delivery, task based work, and online marketplaces since 1 July 2024. The ATO matches this against your return, so leaving side hustle income out can lead to an amended assessment, a tax bill, and interest.

The ATO does not treat a side hustle as a separate, tax free category. Your activity is either a genuine hobby or it is producing income. A one off sale of a personal item, or a true hobby with no real commercial intent, is generally not taxable. But if you provide services or rent assets through a platform for a fee on any regular basis, that is income and it is assessable. If your activity amounts to a business, you may also need an Australian business number.

Rideshare driving, such as Uber, DiDi or Ola, is treated differently from most side hustles for goods and services tax. The ATO treats ride-sourcing as taxi travel, and the usual rule that you only register for GST once your turnover reaches 75,000 dollars does not apply. If you carry passengers for a fare, you must have an ABN and be registered for GST from your first trip, no matter how little you earn. Your gross fares are assessable income. You can claim the work related portion of your car expenses using the logbook or cents per kilometre method, along with platform fees and other directly related costs, and because you are registered for GST you can also claim GST credits on the business portion of those expenses. Registering for GST means lodging a business activity statement.

If you only deliver food, such as Uber Eats, DoorDash or Menulog, and do not carry passengers, the special taxi rule does not apply. Food delivery follows the normal rule, so you only need to register for GST if your turnover reaches 75,000 dollars. Your delivery income is still assessable, and you can still claim the work related portion of your expenses. If you both carry passengers and deliver food, the ride-sourcing side means you need to be registered for GST.

Rent you earn from renting out a room or your whole home through a platform such as Airbnb or Stayz is assessable income and goes in the rental section of your tax return. Residential rent works differently for GST: it is input taxed, which means you do not charge GST on the rent, you cannot claim GST credits on your expenses, and you do not register for GST for the accommodation even if you earn more than 75,000 dollars. You can claim deductions for the part of the property you rent out and the period it is rented or genuinely available for rent, such as a share of mortgage interest, council rates, electricity, insurance and the platform's fees. When a room is not available for rent, it is treated as private.

There is a catch that surprises many hosts. Your main home is normally exempt from capital gains tax when you sell it. Once you use part or all of it to earn income, such as renting a room on Airbnb, you lose the full exemption for that part and that period, and some of the capital gain on sale becomes taxable. The taxable share is generally based on the floor area you rented and how long you rented it. Getting a valuation of your home when you first start renting it out can help work out the gain later. This applies even to renting out a single room, so it is worth understanding before you list.

Selling goods online, freelancing through a platform, doing task based work, or earning from content on sites such as YouTube, Twitch or Patreon, all produce assessable income if you are doing it to make money rather than as a genuine hobby. If you run it as a business, you generally need an ABN. If you do work for another business and do not quote an ABN, that business must withhold 47 percent from your payment, which you claim back at tax time. You report your gross income and then claim your deductions separately, rather than only reporting the net amount.

You can claim expenses that directly relate to earning your side hustle income, apportioned for any private use. Depending on the activity that can include platform and service fees, the work related portion of car running costs, tools and equipment, and a share of home running costs where you work from home. Keep records of your income and your expenses, including receipts and how you worked out any private use split, and keep them for five years. Reporting income after the platform's fees and then also claiming the fees is a common error, because it claims the fee twice.

Most side hustles only need to register for GST once turnover reaches 75,000 dollars, with the two exceptions above: rideshare driving, where GST applies from the first dollar, and residential accommodation, which is input taxed and outside GST. You need an ABN if you are carrying on a business or enterprise. If your side hustle income grows, the ATO may put you into the pay as you go instalments system, so you pay tax in instalments through the year rather than in one bill.

Example only. A person earns 12,000 dollars in gross fees from a side hustle during the year and has 3,000 dollars of expenses that directly relate to earning it. They report the full 12,000 dollars as income and claim the 3,000 dollars in deductions, so 9,000 dollars is added to their other taxable income and taxed at their marginal rate. If the side hustle were rideshare driving, they would also need to be registered for GST and lodge a business activity statement, separate from their income tax return. This is an example only.

Do I have to declare a small side hustle?

Yes. Income from providing services or renting assets through a platform is assessable, however small, and the platform reports it to the ATO.

Do Uber drivers really have to register for GST straight away?

Yes. Ride-sourcing is treated as taxi travel, so you must have an ABN and be registered for GST from your first trip, regardless of how much you earn.

Does the same rule apply to Uber Eats?

No. Pure food delivery follows the normal 75,000 dollar GST threshold. The from the first dollar rule is for carrying passengers.

Do I charge GST on Airbnb income?

No. Residential rent is input taxed, so you do not charge GST and do not claim GST credits, even above 75,000 dollars.

Will renting a room affect the tax when I sell my home?

It can. Using part of your main residence to earn income means part of the capital gain on sale can become taxable, based on the area and period rented.

What happens if I do not quote an ABN?

If you do work for another business without quoting an ABN, that business must withhold 47 percent from your payment, which you claim back when you lodge.