ATO's dragnet: Millions of side hustles face shock tax bill
The tax office now sees everything you earn from Airbnb, Uber, OnlyFans and property investments – and their AI system is ready to flag thousands of Aussies side hustlers who don't declare it all.
New reporting regimes will see the Australian Taxation Office have its strongest indication yet in 2025 of individual's sources of wealth across a dozen different types of third-parties including online marketplaces, cryptocurrency providers and share economy providers – with AI data-matching expected to flag all discrepancies.
The ATO's new system can now see transactions as small as a $50 car space rental, a $100 Airtasker job or a weekend Airbnb rental – and match them to names, birth dates, and tax file numbers.
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CPA Australia tax lead Jenny Wong said the gig economy was now reporting incomes directly to the ATO which could see some in for a shock bill this year.
She warned anyone who doesn't report money earned through online platforms and pay tax on those amounts risked an amended return, extra tax bill and penalties.
'Until this year, individuals have been required to self-declare the income from their side-hustles. Now nothing will go under the radar. If you deliver food with DoorDash, work some casual jobs through Airtasker, or make content for Patreon, YouTube or OnlyFans, these sites are now reporting your earnings to the tax office.'
The data-matching warning applies right down to even renting out a car space for a night, let alone a spare room or your investment unit.
'These rules apply to a broad range of services, not just the most well-known. If you use a website to rent out a carparking space or your designer handbag, this income will be recorded, and you'll need to pay tax.'
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Property investors will face the highest scrutiny under the new system, with the ATO now cross-referencing not just data from bank accounts, property managers and insurance companies, but also those off rental platforms and sharing economy apps.
'You can claim an immediate deduction for some expenses in the income year you incur them provided your property is rented or genuinely available for rent,' an ATO statement said – though the cost must be paid by you not your tenant or someone else and you must keep adequate records for evidence.
Ms Wong reserved the biggest warning influencers and those who have had a strong year of earning activity through sites like YouTube and OnlyFans, and said influencers have an obligation to declare any gifts and gratuities received as a form of payment.
'You must pay tax on income you earn above the tax-free threshold of $18,200,' she said.
'So, if you've had a successful year earning money through advertising revenue and streaming subscriptions, as well as through gifts and gratuities, the ATO will be expecting you to cough up. Yes, this even includes free cars, holidays, clothes and anything else you're lucky enough to receive as a form of payment.'
Those amounts due to the tax office could run into the tens of thousands, she warned, 'depending on how much you've earned during the year'.
This as ATO warned wild claims and missed income declarations were in its sights this tax return season.
Among the areas in the hunt were interest and investment income, employment income, government payments, capital gains tax from the disposal of shares and property, employment-related foreign source income, taxable government grants and payments, payments made to contractors in the building and construction industry, private health fund information and distributions from a favoured source for many investors: partnerships, trusts and managed funds.
CPA Australia's tips for gig economy workers:
- Declare all income: Ensure that all earnings are reported in your tax return, regardless of the amount or frequency. This includes gifts and gratuities.
- Maintain accurate records: Keep detailed records of income and expenses to support your deduction claims.
- Understand your obligations: Familiarise yourself with your tax requirements, including ABN registration and GST obligations if applicable.
- Seek professional advice: Consider consulting a professional tax agent like a CPA to navigate your tax affairs and ensure compliance.
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