Is Your Side Hustle Tax Compliant?

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like there's so many different ways. I remember a couple of months ago we had a money diarist who just did stuff on air tasker, and it's just like, there's so many different ways to have a side hustle. That doesn't mean you have to register in ABN and start an entire business. You can just like literally just hustle on the side for a little bit, go in some extra casholer and you're good. I love it as long as you pay tax on it. Yes, And that's why this whole episode is right. So for anyone who.

and sell them on Etsy side hustle. Like, there are so many different ways to generate income, whether you are in a more structured side hustle, I guess framework, so something like being an Uber Eats driver or you know, actually doing DD or something like that, all the way

to actually having a full blown side business. Like we've seen on money Diaries before where people are like, oh, I have a full time job, but also I have this entire company that I run in my spare time, and I'm like three children, How do you even have spare time? Because I have no children and still no spare time. So it blows my mind how creative our

community has been in picking up side hustles. So it could be you driving Uber, or it could be you having a full blown company, or it could be you letting out your spare room on Airbnb to have guests on the weekends when you're maybe either home or not home. I think it's so cool how creative our community has been with finding side hustles that before they were like, oh, I didn't even know that I could have a side hustle.

And then I realized that my spare room could literally have an Airbnb guest in there and I could earn some extra cash. How cool is.

adores it. But she's gotten to a point where she's just like, all right, I do want my kid to go to daycare a couple of days a week just for like the social interaction. But she's not willing to take on a full time job yet or go back part time into her role. She's doing laundry. Like she's just become kind of like a washing lady for a couple of families around the area, which I think is

actually genius. So on her days off, she goes and picks up the washing, takes it back to her house, washes it, folds it, does whatever else, and then just drops it back and makes bank from it. And do you know what. I'm obviously not going to out her on the podcast, but it's a little cash job, so she's maybe not doing the tax thing she should be doing. But like I'm not going to dob on her. And if the ader come knocking, I'm like, I don't know

what you're talking about. I made that example up all by myself.

staying engaged with people who are around you. And like, I'm sure those families that your grandma works for, like she's kind of hard, it's a family, and like she

probably doesn't want to lose that either. So I think there are lots of different reasons why people have side hustles, but predominantly, especially if you're listening to she's on the money, it's probably due to cash, which is why we need to be careful about how we generate it so we don't end up with like a hefty tax bill at the end of tax time.

is not a side hustle. A side hustle to me and a side hustle to the ses on the money community is just getting some extra cash on the side. It's not going, oh, I have a full time job and I have a freelance career as well. Like, I think we need to differentiate that because I would hate people to listen to this and be like, oh, Victoria doesn't think it's legit. Ye, no, I do, and you

are the biggest hustler of them all. So some people just don't have a main job and then put it all together because they have a whole heap of sid hustles as well, which is kind of cool. What are your hot tips when it comes to like nailing a side hustle, all right, I've written down five hot tips. Are you ready for them? Really? So start small and don't invest right away. So the value of starting small,

I don't think can be overstated. People often with side hustles bite off more than they can chew and then have to wind back significantly. So make small steps today to put your side hustle together is going to put you ahead of those who are starting tomorrow. But also it's going to put you in a position where you're completely in control of scaling that too. Often, like let's use ironing as an example here, you'll go, oh my god, I can get through like a basket every single night.

Is that actually feasible? And like is that actually going to fit into your lifestyle or is that just something you could pick up on a Sunday. So I think it's about starting small, testing the water to see how you go. The next is finding the right side hustle for you. I think there's been a lot of pressure

to quote have a side hustle, which shouldn't exist. Like, if you don't want a side hustle and you actually want to enjoy your free time, do that that is a privilege, Like the idea that people have a side hustle for one of two reasons. One extra income, and they are swapping their time for money. That is important. But I also just think if you don't want a side hustle, don't have one. People put too much pressure on themselves. But it is a really good way of

getting ahead, So find the right one for you. So is it making the money that you need it to make, Is it going to do the things that you want it to do. Is it nourishing you in the way that it needs to. I think sometimes people end up again biting off more than they can chew, and they

go got this great side a hustle. I'm making like fifty bucks every time I sell X, But then you find out it's taking them fifty hours to make X, and then it's actually not a good trade off for the time that they're sacrificing, and they actually should have just picked up, you know, an extra guest on Airbnb and chucked them in the spare room because they would

have made better bank. So I think it's about balancing what is actually feasible when it comes to having a side hustle, Because regardless of how passionate you are, I think your time is absolutely worth money, and if it's not, you know, balancing out, you're going to get burnt out really quickly. The next is understanding your reasoning for starting. So is it actually cash? Is it to pay off a debt? Is it to build an emergency fund? Is it to put yourself ahead when it comes to investing

for your retirement? Is it to if your first home deposit? Is because you just want some more engaging work to do, Like, we need to understand why to keep on track because the side hustle can quite quickly become really all consuming. So especially if you have a full time job and then you're taking on a side hustle. Remembering what you're compromising there, like is it actually family time? Is it something that you don't want to be compromising? Is it

short term so you can get out of debt? Is it short term so you can afford a europe trip?

coffees anymore. Guys, it is not sexy. You're not is sexy. Having financial and mental wellness, like being consistent and looking after yourself and picking a side hustle that actually works for your mental health and your mental state is so important, like this idea of rise and grind culture and like always being on the hustle, like, honestly, I was no more girl boss, bullshit, none, just put it in the bin. I just I don't like it. It's so much about

wellness and looking after yourself. And please don't get me wrong, there is nothing sexier than a person who knows what they want and is out to get it. I'm all about that, But there's the difference between that and someone who's like, oh my god, I'm a hustler. I'm a cultured hustler and I do so I do. Like you're not going just sit down, sir, So really prioritizing your time and making sure that you're sticking to those boundaries.

From my perspective, is really important because you know, we're all about money at cheese on the money, we're all about generating income, we're all about everything. But over and above all of that, from my perspective, it's actually about you and your journey. Like the tagline of my business seller is it's your journey, And that's the thing that we really want to focus on because it's not necessarily about the destination. From my perspective, it's about enjoying the

journey as well and finding balance in your life. And I think that sometimes we forget that, especially when we get swept up in this side hustle culture of like earning money and being a girl boss. Like we're not girl bosses. I'm not a girl boss. No, we're just bosses and we're just doing what we need to for our life and our family and what we want. And then the last one, this is like me directly talking to freelances. Here, you are going to ask for what

you are worth. You are going to know your worth, and you are going to add tax to that. We are not anymore going to be afraid to charge people for the services that you are providing. We are not going to undersell. We are not going to under charge. If someone comes to your business and wants a discount, thank you for coming. No, we don't do that. Like we put ourselves first because you are the priority here.

You need to be maintained and there is always going to be somebody who wants to pay for your services in full. I promise.

possible position. And as somebody who worked full time and then had cheese on the money as a side hustle, and then all of these other businesses that I keep starting because I am a psycho. It is just so important to remember why you are there and prioritize your rest in recovery. Like a couple of weeks ago, Gee, I was completely out, like I could not podcast. And it wasn't because I had COVID. It wasn't because I had the flu. All of those things were going around.

I went to the doctor, I got tested. It was me being burnt out. And that is not something to write home about. Like, that is not something I'm proud of, because if I am going to you know, I would love to think that I'm a leader. You know, I really strive to be a good leader. How can I do that to myself and then expect the rest of

the community to follow suit? Yeah, Like, how can I tell you, hey, I think you need to be prioritizing your work life balance and then people looking at me being like, she doesn't, though, yeah, exactly, Like so I'm a bit at the time, I was like, oh my gosh, like I'm fine, I'm going to get it done. But even then, I just wanted to do what I said I was going to do and fulfill all of the

work requirements I had. But even then I probably should have just taken a SICKI and I didn't, And I like, I'm not proud of that, and I think that a lot of you should learn from that and go gin know what. That put Victoria even further behind because she didn't just stay in bed and sleep like she should have.

She put herself further back. And so I think it's it's one of those things where we do really need to prioritize rest and recovery and actually even building buffer time and transport time, Like how many times have we booked meetings back to back and just forgotten that it's going to take half an hour to get from one meeting to another, or that you have to go pick the kids up from school in between that, or that you know you don't just have to pick the kids

up from school, you have to pick them up, and you have to get them afternoon tea and then drop them somewhere else and like all of that time's written off. Like we need to actually be fully aware of what work life balance looks like. And don't get me wrong, sometimes that balance is out of sync because it is a balance and it floats back and forth. But it's always about trying to find an equilibrium that really works

for you. And researchers have recently said that if you're engaging inside hustles immediately after completing your main job, that is a recipe for burnout, so just be aware of it. I think making sure that you're setting really healthy boundaries is also really important.

Right worklay Falons is getting up at seven am and going to a beautiful ballades class and doing this and grabbing a coffee like no, mine's actually sleeping in and sometimes scrolling on in Instagram and that's what keeps me straight for the rest of the day, whereas to me it would be the opposite, exactly, like the coffee exactly. And don't get me wrong, I still love polarates, I

still love coffee. But I just think there's this unrealistic expectation of what work life balance looks like because social media, as we've talked about a million times on this podcast, really plays into it because you go, well, this person, they're so balanced, how good is that they are going to work and then straight after work they go to Polarates and then they go home and they make this nourishing green bowl for their dinner, and then they have

leftovers for lunch the next state. Like for some people that would just burn them out, Like some people just need to go home and crash. I get it, everybody's different, but I think really understanding what your stresses are and what burnout could look like for you is really important.

hustle workplaces, which is kind of cool. It also found that side hustles empowered individuals to be in control and in charge of their work, which led them to become more emotionally and cognitively invested in their side hustles and also transmits positive emotions that are associated with this experience to their main job, which obviously subsequently improved job performance, which is kind of cool and interestingly because you know, in so many people's employment contracts it says you can't

have another job like teak it out. Yeah, absolutely, it says you can't have another job without written like approval and approval or permission from your employer. But that actually

might make you a better employee. That's weird, kind of cool, kind of interesting not to see how the world is changing as well, But it makes sense if you distill it down, like, gee, if you're having to prioritize your full time work and then this side hustle that you're doing and balance it all, like you probably can find a better equilibrium than just like being on the nine to five Monday to Fridagrant, I actually definitely agree with that. I of a story hustle.

you sort this out. I sat you down, we went through it all. I had to look at your bass and you know, worked out what tax you should have paid because the ATO was obviously wanting you to pay that. We had a chat with the ATO and negotiated our way out of it. We didn't have to pay any penalties, which was a money win. We did have to pay the tax though. Went back to the tax agent. She was like, not my circus, not my monkeys. You signed your tax return. It is your problem, it is not my problem.

they are qualified to do what they do. But also knowing that your gut feeling, because TI if you were telling me, like you knew you shouldn't have been doing this, but you were like, no, she's aational, she did it, you signed off on it, and it was all good.

feel like doing some crochet blankets. You made fifty bucks here and there by selling them to your friends. The eater is like, no, keep that money, like that's actually a hobby, that's just you doing it. So there is actually there is actually clause. There is actually a hobby clause in your tax return where you don't have to

declare some earnings from genuine hobbies. But I think that's very different than going and trying to earn an income and actually setting yourself up because you would have had to set yourself up with the TFN through Uber.

over toclaire. You would much prefer to say, hey, I made fifty bucks from crocheting some blankets or selling some doll house furniture I made and put on Facebook marketplace during lockdown, which I had a friend do. I got wildly successful. By the way, I think that borderline might not actually be a hobby for her, it's now it's

now her job. It's now a full blown job. But it's about trusting your judgment and trusting your gut, and noting that there are other resources to look at, Like the ATO posts so much information about what you can and can't declare every year. Smarter Money puts some information on their website about what you can and can't claim, Like there's so much stuff out there. So regardless of whether you're using a tax agent to do your tax return this year or you are doing it yourself, I

think it's just hard and fast. Be truthful. They don't lie, don't claim things that you aren't meant to claim, because nowadays, it's not the nineteen sixties anymore, where they just can't prove it, and if they order you, you've got to go find all your paper receipt to have receipts for everything. Now in twenty twenty two, everything's data matched. The ATO knows they have access to your bank accounts. It's kind

of worderline terrifying. At the same time, as for me as a financial advice I kind of love it because I'm like, how easy the data matching here is absolutely fantastic.

I feel really bad because Tiff is one of my greatest friends. Yeah, but also just that she puts so much trust in an accountant that did the wrong thing by her. How can they give you the wrong advice. Look, I think she just you don't know what you don't know, and that's why it's really important to kind of second guess things and go with your gut and understand. You know that you can seek a second opinion or a third opinion or whatever you want to do. And at the end of the day, she did end up in

a better position. We were able to liaise with the ATO and talk to them about it and they were like, Okay, cool, no problems, we can see how this went wrong. Let's just clean it all up. And we did and it was fine. But it's one of those things that it's just really stressful, and I really wanted to include that in today's show because it's not just me going this is important. It's me going, hey, here's a very real, very true example from someone who is very deeply ingrained in.

Now she's on the money community. You've probably sent on every money win thread ever because she always has great money wins and it's so rude, but it's one of those things where just listen to Tiff, this is her story, this is how it works. These are real people from our real community who are going through things that you could avoid just by listening to a podcast.

we were completely safe from that one. But it's just so important to remember that at the end of the day, the buck actually stops with you. You can't just outsource it to an account and be like whatever, it'll be fine, Like, yes, it usually ninety nine point nine five percent of the time is. But it's always about trusting your gut and if you don't feel right about something, which you heard from Ti. If she didn't feel right, but she was like, oh,

she would know, like she's an accountant. When it finally came back to bite her, thankfully she had me who's not an accountant but knows. Okay, let's just deal with this. And we did end up getting another account involved and getting it all cleaned up, and it was so fine. But it's one of those things where that was really stressful and you can avoid that. Yeah, brilliant.

and it gets reclaimed. So it's very left pocket, right pocket. But it can feel like a lot. But a lot of small businesses don't register for GST up front. They actually register for it once they hit that seventy five

thousand dollars turnover point. So that's the point at which you need to register for GST, but you can actually charge GST from day dot if you register and you want to start charging it, which for a lot of small businesses they do lean into that because then there's no like, once you hit a certain amount of revenue,

they don't have to reset expectations. With excietly and with freelancers, this can actually lean into being quite a good way to like establish reliability in a way, like if you're charging GST, your client's automatically going to assume you earn

more than seventy five thousand. Yes, it also means that once you do hit that mark, you don't have to re establish with a client and be like, hey, client, just so you know, next month's invoice is going to have an additional ten percent on it, because to the client that just feels like they're paying an extra ten percent and they're being like negatively impacted, Whereas sometimes people might want to set that expectation from the very beginning and it's all very easy. So I think it's about

understanding what that means. I would also here plug my

other podcast to the business Bible. If you haven't already listened to that, and you are a side hustler, or a small business owner, or even a big business owner, I would say that that's a very good place to start, because not only do we go through all of those structures and what your obligations are, but there is a specific episode where I actually go through my personal banking structure and explain which bank accounts I have, why and how much are money I put in each of those.

And I think that that can be quite powerful, because if you have the right structure set up, your business flows so much easier. George, Like, if you're a small business owner and you only have one account and all your money comes in there, and you're paying your GST and your BASS, and you're paying your salaries and you're paying for all your expenses from that, it can get quite murky. Whereas if we have a few different accounts and we're actually putting thirty percent of our income into

there for tax. When tax time comes, not only do we have enough money to pay tax and we don't have to blink an eye, but usually there are refunds on top of that, so we end up in a better position where tax time comes and it's not as painful as it could be. In fact, you're kind of looking forward to tax time because you know there's probably a bit of a refund there and you're like, oh, if I get that done, like everything will be much easier and I'll probably have a few grand in my

back pocket that I could spend on something else. So I think it's important to understand what that means and how it works. But to add to that, if you're a taxi driver or an uber driver, you actually charge GST the entire way, regardless of what you have ever earned. And then if you're a nonprofit organization with an annual turnover of more than one hundred and fifty thousand, that's

your GST thresholds instead of the seventy five. And then if you're a business and you are a bit smaller and you're like, yes, but v I also want to claim fuel tax credits, you do have to be registered for GST. And then international retailers with Australian sales of more than seventy five thousand also fall into that bucket as well. So as I said before, if your annual turnover is under that threshold, you can still register if

you want. There are obviously benefits for it, but the thing I would do is actually just chat to your accountant about what structure would work for you. And if you are a small business owner, even just sitting down with an accountant as a big one, so off like, how do I do this? What does this look like? It's going to pay dividends? I promise it will be a very important meeting. Are there any other benefits to

registering v lord? Look, once you're registered for GST, you don't actually pay GST on business expenses, so that's where I said, it's like left pocket, right pocket. If you're registered for it, you can claim it, which is kind of cool. So you'll still get charge GST on invoices and you'll still have to pay it. But when tax time comes and you file your tax return with the ATO, you get that back, so that's kind of cool. And what do I need to register? You need an ABN,

my friend to an Australian business number. However, if you're registering as company, then you'll need an Australian company number, which is called an ACN before you apply for an ABN, and then after GST registration, all you need to do is add GST to the prices that you are charging, issue tax invoices to your customers, keep receipts and invoices to claim back all the GST that you've paid on business expenses that year, and then submit a business act.

We're going pretty deep into the business Bible side of things, So let's move to the next question again. If you haven't listened to the Business Bible, I absolutely would because I'm really biased. I thought it was great. It certainly was also coming back. So is it when probably later this year, wonderful once I've got the property playbook under control and that one's back perfect. Just a few things the Queen of biting off more than I can say.

I mentioned bass earlier, but I didn't know what it meant. Bass is sexy. What is it? It is a business activity statement. So a business activity statement is a form that you fill out between one and twelve times a year. So it completely depends I do bass and I do bam bass quarterly, so that means that I do four bass statements each and every single Yeah, And it really depends on your business side as to how often you

do this and when you do this. But basically The ATO uses the information that you provide on your bas to work out how much GST you might have to pay or how much or of a refund you might get, and it's also used for like pay as you go tax So for all of my employees, it means that I get to say to the ATO a few times a year, this is what I've done, This is how much money I'm earning, this is how much money is coming in and out, and how it works, which means

I can be more on top of my tax. So I don't just wait until June thirty to do a big tax refund or a big tax submission. I actually do it throughout the year, and it means I actually pre pay a lot of my tax and then we do a big kind of audit at June thirty and go did I pay the right amount? Is there anything I need to make up? Or do I get a refund? So for me, I personally quite enjoy a BUS and I enjoy it because I feel like I'm on top

of my business consistently. But I also really enjoy it because it means that I don't just get a really big tax bility the end of the year.

claim things that you haven't actually done. But because your bus is usually used for other tax reasons, you're probably going to need to pride extra information on your business. You income, any employees, and it's linked to the ATO and stuff. So it's actually, I think it's pretty cool. I think it's pretty sexy. This is pretty business focused.

But I hope that even if you're not a business owner, you listen to this and you're like, oh, that's kind of cool that businesses have that flexibility to like pay tax more consistently so that they don't end up really overwhelmed at tax tax. And it's kind of.