February delivered mixed signals for the Australian economy.
Labour market conditions were steady. The unemployment rate held at 4.1%, with 18,000 more people employed in January, driven by a rise in full-time jobs and partly offset by a fall in part-time roles.
Wage growth continued to edge higher, up 0.8% in the December quarter and 3.4% over the year, while household spending softened.
Inflation was slightly higher than expected, with CPI remaining at 3.8%, and trimmed inflation (the RBA’s measure of underlying inflation) increasing to 3.4%, up from 3.3%.
Reporting season added its usual volatility to the share market and the ASX hit several record highs towards the end of the month.
The Westpac–Melbourne Institute Consumer Sentiment Index fell further by 2.6% to 90.5 in February, impacted by February’s cash rate increase.
The Australian dollar strengthened, largely due to global risk sentiment, hitting a three-year high of USD 0.71 by month’s end.
Got a side hustle? Don’t forget your tax
With the ongoing cost-of-living squeeze, record numbers of Aussies are supplementing their income with side hustles.
But before you dive into a new gig, it’s important to understand some of the tax essentials that come with running a small business.
Whether you’re monetising online content creations, or running bootcamp sessions, the ATO may consider that you’re running a business and expect you meet your tax obligations.
Are you running a business?
Under the current tax rules, if you earn money through continuous and repeated activities to make a profit, it’s likely you are considered to be carrying on a business.i
Income from genuine hobbies is non-assessable, but income from a business must be declared in your tax return.ii
Business operators face a range of obligations including applying for an Australian Business Number (ABN) and registering for pay as you go (PAYG) withholding if you hire any employees.iii
There is no legislative definition of “carrying on a business” but the ATO provides information and questions to help you decide:
Step 1: Identify relevant, related activities, including:
keeping records
obtaining and maintaining licences and permits
renting out premises or goods
providing goods or services.
Step 2: Are the activities a business?
Do you intend to be in business?
Do you intend to make a profit and is there a realistic chance of doing so?
Is the size or scale of your activity enough to make a profit?
Are the activities repeated and continuous?
Are your activities planned, organised and carried out in a business-like manner?
Accurate recordkeeping from the start
It’s important to set up a recordkeeping system from day one to track your income and expenses accurately.
You’re legally required to keep records of all transactions relating to your tax, superannuation and registration obligations when you start, run, sell, change or close a business.iv
Records need to be kept for five years,and you must be able to show the ATO your records if required.
Claiming genuine business-related expenses
If your side hustle is a business, all income must be declared, regardless of the amount.
The good news is you can claim tax deductions for business expenses, provided you keep receipts and the expenses directly relate to earning side hustle income (including the cost of managing your tax affairs).
If your annual turnover exceeds $75,000, you must register for Goods and Services Tax (GST) and pay all the GST collected on your taxable sales to the ATO every quarter.v
Managing cashflow
Good recordkeeping also helps you monitor the financial health of your business and know whether your business is running at a profit or loss.
It’s crucial for managing cashflow. One of the most common reasons small businesses fail, is losing control of their cash position and unable to pay their bills on time.
ATO data matching
If you are only earning small amounts, it might be tempting to assume the ATO won’t notice if you don’t report your side hustle income. But side hustles are now an important ATO surveillance target.vi
More than 600 million transactions are reported to the tax office each year. The ATO receives and matches data from banks, payment systems, government agencies, share registries, cryptocurrency service providers and building and construction payments.
Impact on government benefits
Extra income from your side hustle can also affect your eligibility for government benefits such as the Family Tax Benefit or Child Care Subsidy. It may also affect how much Medicare Levy surcharge you pay and when you are required to start repaying a HECS/HELP debt.
If you need help getting your side hustle onto a solid business footing, contact our office today.
i Are you in business? | Australian Taxation Office
ii What to include in your business’s assessable income | Australian Taxation Office
iii PAYG withholding | Australian Taxation Office
iv Overview of record-keeping rules for business | Australian Taxation Office
v GST – Goods and Services Tax | Australian Taxation Office
vi Side hustles are front of mind this tax season | Australian Taxation Office
Tax Alert March 2026
ATO tightens compliance and expands employer support
The ATO has released several new resources, including a checklist to help employers get ready for what it calls a “once-in-a-generation change” along with an updated guidance on commercial deal tax.
Here’s a roundup of the latest news.
Preparing for Payday Super
The ATO has issued a Payday Super Checklist to help employers prepare for the commencement of the new regime from 1 July 2026.
The timeline checklist is designed to help employers understand the new requirements, plan their transition, prepare their business systems and processes and switch to paying super each payday.
In addition, Practical Compliance Guidelines outlining the ATO’s compliance approach during the Payday Super legislation’s first year of operation, have now been released.
Barter credit tax scheme under the microscope
The ATO is warning taxpayers to steer clear of an emerging tax scheme involving barter credits, a form of alternative currency used in some business networks.i
The scheme involves artificially inflating deductions by claiming donations of barter credits to deductible gift recipients. This practice is unlawful and may trigger a tax audit and significant penalties.
According to the ATO, the scheme is enabled by barter exchanges issuing credits with a nominal face value far higher than the amounts actually paid by participants.
Get certainty on commercial deals
To help business owners understand the tax implications of proposed commercial transactions, the ATO has created a series of case studies and videos.
The current case studiescover a range of scenarios, including a small business capital gains tax (CGT) rollover for a primary production business, the CGT implications when two siblings wish to sell family company shares to a third sibling, and the restructuring of a small company and subsequent share sale.
The information resources are designed to show how engaging early with the ATO can help resolve tax issues before lodgement and avoid later tax disputes.ii
Protect your GST and fuel tax credits
Some taxpayers are missing out on GST and fuel tax credits because they are not claiming the credits within the four-year time limit, which generally expires four years from the due date of the original BAS in which the credits should have been claimed.
Lodging an amendment or voluntary disclosure does not protect these credit entitlements, as the ATO must process amendments and include it in your tax assessment within the time limit.iii
Once GST and fuel tax credit entitlements expire, the ATO has no discretion to amend a tax assessment to include the credits. Good processes and regular reviews are essential to avoid missing out.
Avoiding delays when winding up SMSFs
The ATO is reminding trustees to follow the correct procedure when winding up their SMSF if they wish to avoid errors and delays.iv
Trustees have 28 days after lodging their final SMSF annual return (SAR) to complete the final rollover before the fund can be officially wound up. Failing to roll out all member benefits can result in significant delays, an inability to use SuperStream and requires lodgement of an additional SAR if assets remain after the wind-up date.
Trustees need to keep their contact details updated, promptly finalise outstanding transactions and pay debts, close the SMSF bank account only after confirming the wind-up, and roll over most of the fund’s asset before lodging the final SAR.
ATO help with natural disasters
Following the series of natural disasters around the country, the ATO is reminding taxpayers that support is available for those affected by disasters such as bushfires, cyclones, drought, flood or storms.v
For major disaster areas, the ATO may pause correspondence and provide extra support depending on circumstances. This may include:
extra time to pay tax debts
more time to lodge tax returns, BAS or other obligations
personalised payment plans
remission of penalties or interest charged during the affected period.
If you need more information or clarification about any of the recent tax changes, please give us a call.
i ATO warns about barter credit tax scheme | Australian Taxation Office
ii Commercial deals service resources | Australian Taxation Office
iii Act early: Protect your GST and fuel tax credit entitlements | Australian Taxation Office
iv Get it right! Avoid delays when winding up your SMSF | Australian Taxation Office
v Summary of our disaster support | Australian Taxation Office