Money & tax

Do you need an ABN for a side hustle in Australia?

Short answer: you need an ABN if your side hustle is a business (an “enterprise”), and you can’t have one if it’s a hobby. The tricky part — and the part most side hustlers get wrong — is working out which one yours is. The good news is the rules are clearer than the internet makes them seem, and getting an ABN is free when you do need one.

Business or hobby? The question that decides everything

Neither the ATO nor the Australian Business Register uses a single test. Instead, they look at the overall picture of how you operate. According to the ABR, features of a business include:

• an intention to make a profit — not just covering your material costs
• the activity is repeated, not a one-off
• it’s systematic and organised — you keep records, you have a plan
• it’s carried on in a similar way to other businesses in the same field
• the activity has reasonable size and scale.

A hobby, by contrast, is a pastime done for recreation or pleasure. You might sometimes sell what you make, but you’re not running it to generate profit.

Some practical examples of how this tends to play out:

The moment you set up to earn ongoing profit — advertising, repeat customers, records, a pricing strategy — you’ve almost certainly crossed into business territory, even if the dollars are small. There is no “under $X per year it doesn’t count” rule. That widely-repeated myth confuses the ABN question with the GST threshold (more below).

What having an ABN changes

Getting an ABN isn’t just paperwork — it changes how your side hustle works in practice:

• No 47% withholding. Without an ABN, other businesses that pay you must generally withhold 47% of the payment for tax. With an ABN on your invoice, you’re paid in full and settle your own tax.
• You can claim deductions. Business expenses (equipment, materials, a portion of phone and internet, etc.) generally become deductible against that income.
• You can register for GST, a business name, and a .com.au domain.
• You must declare the income in your tax return — though note you must declare business income whether or not you hold an ABN.

If your activity is genuinely a hobby and a business asks for your ABN, you don’t have to get one: you can give them a Statement by a supplier form instead, which tells them not to withhold.

Where GST fits in (and why $75,000 is the number people misquote)

An ABN and GST registration are two different things. Plenty of side hustlers need an ABN but will never need to register for GST.

GST registration becomes compulsory when your GST turnover (gross business income, not profit) reaches $75,000 over 12 months, or when you expect it to. You then have 21 days to register. Below that, registration is optional.

The big exception: taxi and ride-sourcing services. If you drive for Uber, DiDi or similar, the ATO requires GST registration regardless of turnover — from your very first trip. That’s why every rideshare driver needs an ABN plus GST registration, while an Etsy seller making $10,000 a year needs only the ABN.

How to apply (free, about 15 minutes)

Apply directly at the Australian Business Register — it’s free. You’ll answer questions about your activity to establish that you’re carrying on (or commencing) an enterprise. Steps like setting up a business social media page, buying equipment, obtaining insurance or issuing quotes all count as evidence of commencement.

Two cautions:

1. Skip the middlemen. Private websites will lodge the application for a fee. They’re unnecessary — the official application is free and straightforward.
2. Don’t apply if you’re not entitled. The ABR can review your entitlement and ask for evidence, and applying for an ABN (or claiming GST credits) when you’re not entitled can lead to penalties. And if you’re really an employee, you’re not entitled to an ABN for that work at all — an employer asking you to “get an ABN” to avoid putting you on payroll is a red flag worth checking with the Fair Work Ombudsman.

What to do next

If your side hustle looks like a business by the criteria above: apply for the free ABN, start keeping records of income and expenses from day one, and put aside a portion of earnings for tax. If it’s genuinely a hobby, keep it simple — but revisit the question if it starts growing, because the obligations start when the activity changes, not when you get around to the paperwork.

This article is general information only, not tax, legal or financial advice. It doesn't consider your personal circumstances. For advice on your situation, speak to a registered tax agent or licensed adviser, and always check current requirements with the official source linked above.