The Young Australian's Guide to Side Hustles & Self-Employment

An Australian Business Number (ABN) is an 11-digit identifier that tells the world — and the ATO — that you're operating as a business. Not everyone earning money outside their main job needs one, but knowing when you do matters both for legal compliance and for the way clients treat your payments.

You're entitled to an ABN when you're carrying on an enterprise — broadly, when you're operating in a business-like way with the intention of making a profit. A one-off cash job for a neighbour probably doesn't qualify. Regular freelance writing, selling handmade goods on Etsy, driving for a rideshare platform, or doing ongoing consulting work almost certainly does.

The practical consequence of not having an ABN when you should: clients are required to withhold 47% of payments made to contractors without an ABN (called no-ABN withholding). That's not a fine — the client forwards it to the ATO as tax — but it means you only receive 53 cents in the dollar until you sort your tax affairs. An ABN eliminates this immediately.

• ABNs are free — apply at abr.gov.au in about 10 minutes. There's no cost and no ongoing registration fee. Anyone charging you to get an ABN is ripping you off.
• Sole trader is the simplest structure — it means you're operating as an individual under your own name or a trading name. No separate legal entity, minimal setup cost, your business income is your personal income for tax purposes.
• You can have an ABN and still be an employee somewhere else — being a sole trader doesn't affect your employment status at a separate employer or your PAYG withholding from that job.

All income you earn in Australia — from employment, from a side hustle, from selling goods — is assessable income and must be declared in your tax return. This is non-negotiable, and the ATO's data-matching capabilities are extensive. They receive data from over 40 third-party sources including banks, ride-share platforms, short-stay accommodation sites, and online marketplaces.

The key difference between employment income and business income is that business income is reported on a net basis — you declare your total income and then deduct your legitimate business expenses, and pay tax only on the profit. This is why good records matter: every deductible expense reduces your taxable income and therefore your tax bill.

How business income interacts with your employment income:

• It stacks on top. If you earn $60,000 from your job and $20,000 from a side hustle, your total taxable income (after business expenses) is assessed together. The business profit is taxed at your marginal rate — in this case, 32.5 cents in the dollar.
• PAYG instalments — once your business income exceeds a threshold (generally around $4,000 in tax owing from business income), the ATO will put you into the PAYG instalments system. Instead of one large tax bill in October, you make quarterly payments throughout the year. This is not a penalty — it's just prepaying your expected tax. You'll receive a letter from the ATO when this applies.
• Set money aside as you go. A common mistake is spending all your side hustle income and getting hit with a large unexpected tax bill. As a rough guide, set aside 25–30% of every payment received into a separate account designated for tax.