Money & tax

Side hustle tax time 2026: what the ATO already knows, and the myths to drop

Short answer: the “they won’t notice” era is over. Platforms report your earnings to the ATO twice a year, side hustles are named in the ATO’s Tax Time 2026 focus areas, and the tax-agent blog posts circulating this month contain at least one confidently-stated offset that does not exist. If you earned anything from a platform in 2025–26, this is the year to get it right rather than hope.

This is the seasonal companion to our evergreen guides — if you’re starting from scratch, read how side hustle income is taxed and whether you need an ABN first. This piece covers what’s specifically different about lodging for 2025–26.

What the ATO has on you before you lodge

The Sharing Economy Reporting Regime (SERR) sits in Subdivision 396-B of Schedule 1 to the Taxation Administration Act 1953. It requires electronic distribution platforms to collect and report information about the people earning income through them.

It came in two phases:

“Everything else” is broad, and the ATO’s own category list spells it out: digital goods; transport; accommodation, office space, parking and storage; asset rental including vehicles, clothing, equipment and tools; and task services — trades and labour such as electricians and cleaners, delivery or courier services such as food delivery, health, beauty and wellness services, and education and training.

Reports are due twice yearly: by 31 January for the 1 July – 31 December period, and by 31 July for 1 January – 30 June. So for the financial year you’re lodging now, the second half of your platform earnings is being reported to the ATO within days.

What gets reported includes your name and date of birth (or ABN and business name), bank account identifiers, amounts paid to you, GST, fees and commissions.

One myth to be careful with in the other direction

You’ll see plenty of claims that gig income now “arrives pre-filled” in your return. Be careful. The ATO’s own framing, going back to when it expanded data-matching, was that it would use this information to identify and educate taxpayers who made incorrect claims, “with a longer-term plan to pre-fill as much information as possible in future years.” Its published pre-fill availability list doesn’t include gig platform income as a category.

Practically: assume the ATO has the data, and assume you still have to enter it yourself.

What the ATO said it’s looking at this year

The ATO’s Tax Time 2026 focus areas were published on 27 April 2026, with Assistant Commissioner Anita Challen naming two: work-related expenses and omitted income.

On income, the message is direct — taxpayers must declare all sources of income including side hustles, cash jobs, interest and rental income.

On deductions, the three-part test: the expense must relate to earning your income, you must have spent the money yourself and not been reimbursed, and you must be able to support the claim with a receipt, invoice or logbook.

And a third theme that’s new this year — the ATO warned about AI-generated tax advice, noting that AI “often draws from a broad and inconsistent range of sources, which can lead to inaccurate advice,” and that taxpayers remain accountable for the accuracy of what they lodge. Which is a good segue.

The offset that doesn’t exist

Several tax-agent marketing posts circulating this month reference a “$1,200 Cost of Living Tax Offset” for 2025–26.

There is no such offset.

It was a 2025 federal election commitment by the Opposition, costed by the Parliamentary Budget Office — a non-refundable offset of up to $1,200 for residents earning up to $144,000. The Coalition did not win the election and it was never legislated. It appears nowhere on ato.gov.au, and it is not on the ATO’s list of individual tax offsets.

For the record, here’s what actually exists:

• LITO (low income tax offset) — still current, maximum $700, phasing out as income rises.
• LMITO (low and middle income tax offset) — dead. 2021–22 was its final year.
• SAPTO, private health insurance offset, invalid/invalid carer, zone and overseas forces, foreign income tax offset, and superannuation-related offsets.

This is a useful stress test for any tax content you read this month: if a figure isn’t on ato.gov.au, treat it as marketing until proven otherwise.

The 2025–26 numbers you actually need

Tax rates are unchanged from last year.

These exclude the 2% Medicare levy.

There is no separate rate for ABN income. Your side hustle’s net profit is added to your salary and taxed at your marginal rate. There is no second tax-free threshold. Our side hustle tax calculator shows what that stacking actually costs you.

Worth noting how the ATO itself frames the tax-free threshold across income sources: “Your income may come from one or more payers at the same time. Payers include employers, government agencies, or work you do as a sole trader.” Your side hustle is, for threshold purposes, just another payer. If you’re weighing a second job against an ABN hustle, our second job vs ABN calculator walks through the withholding difference.

Deduction rates

• Cars: 88 cents per kilometre for 2025–26, capped at 5,000 work-related kilometres per car per year. The logbook method is the alternative, and you can use whichever gives the bigger deduction provided you have the records.
• Working from home: 70 cents per hour (fixed rate method), covering internet and data, home and mobile phone usage, electricity and gas, and stationery and computer consumables.

One trap on the WFH rate: you need a record of your actual hours worked from home across the entire income year — a timesheet, roster or diary. The ATO is explicit that an estimate of your hours won’t be acceptable.

GST: the rideshare rule that keeps getting over-applied

The general rule is that you register for GST when your GST turnover reaches $75,000.

The exception: if you provide taxi or limousine travel for passengers, including ride-sourcing, you must register regardless of turnover — and the ATO says you must be registered before your first trip.

Here’s the distinction that gets mangled: the rule is defined around carrying passengers for a fare. Food delivery is not passenger transport. The ATO’s own guidance on working for a food delivery service applies only the ordinary $75,000 test, with 21 days to register once you cross it.

So:

That last row catches people out constantly. If you drive passengers on Friday nights and deliver food on weekends, you’re GST-registered because of the passenger work — and that registration doesn’t politely ignore the delivery income.

”It’s just a hobby”

The ATO’s actual test isn’t a dollar figure. It’s a set of indicators, and the more that apply, the more likely you’re in business:

• Do you intend to be in business, and do you have a prospect of making a profit?
• Is the size or scale sufficient to generate a profit?
• Are the activities repeated and continuous?
• Are they planned, organised and carried out in a business-like manner — records, a separate account, advertising to the public rather than friends and family, a business name or ABN?

A one-off transaction can still be a business if it’s the first step in starting one.

Two hard consequences when a platform is involved:

1. The platform reports you anyway. SERR obligations sit with the platform, not with your characterisation of what you’re doing.
2. No ABN means 47% withheld. A business paying you without an ABN must generally withhold 47% of the payment. There’s a genuine escape hatch — the Statement by a supplier form, where valid reasons include the supply being a private recreational pursuit or hobby, no reasonable expectation of profit or gain, or the payment being $75 or less excluding GST — but it only works if it’s true.

The year-two surprise: PAYG instalments

This one blindsides people. Once your side hustle is established, the ATO automatically enters you into PAYG instalments when all three of these apply on your latest return and assessment:

• instalment income of $4,000 or more
• tax payable of $1,000 or more
• estimated (notional) tax of $500 or more

You’ll be notified by letter, usually in your myGov inbox, and start paying once an activity statement or instalment notice issues.

Why it stings: the instalments for the new year often land around the same time as the bill for the year that just triggered them. If your side hustle is growing, plan for both.

Your 2025–26 checklist

1. Pull your platform statements for 1 July 2025 – 30 June 2026 — every platform, including the ones you only used for a month.
2. Reconcile them against your bank. Report gross earnings, not what landed after fees; the fees are a deduction, not an invisible discount.
3. Add non-platform income — cash jobs, direct clients, marketplace sales.
4. Total your deductions with evidence: 88c/km or logbook for the car, 70c/hour with an actual hours record for home office, plus platform fees, equipment, and the work-related portion of phone and internet.
5. Check your GST position if you did any passenger rideshare at all.
6. Ignore the $1,200 offset. It doesn’t exist.
7. Keep everything for five years — from lodgment date for individual records, or from when the record was created or the transaction completed for business records, whichever is later.

If your side hustle income is more than incidental, or you’ve crossed into GST or PAYG instalments this year, a registered tax agent is worth the fee — and their fee is itself deductible next year.

This article is general information current as at 26 July 2026, not tax advice, and doesn't account for your circumstances. Rates and thresholds change. Verify against ato.gov.au or speak to a registered tax agent before you lodge.

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.