Is your side hustle now a business?

Posted on 14 August 2023 | by Allan Hall

Be aware of any tax obligations if your side hustle is considered a business earning business income

Work out whether you’re in business and when your business starts for tax purposes.

What is a business?

Generally, a business involves a set of continuous and repeated activities you do for the purpose of making a profit. Profit can be in money, but it can also be made through other means, like being paid with goods or services (such as a barter deal).

A one-off transaction can also be a business if it is either:

intended to be repeated
the first step in starting a business.

You can run one business or multiple businesses at the same time.

When you’re not in business

Not everything you do to make money is a business. Your activities are not a business when they are:

a one-off transaction (unless it is the first step in carrying on a business or intended to be repeated)
done as an employee
a hobby or recreation from which you don’t seek to profit
a simple investment, such as passively holding shares on which you receive dividends or a rental property you let through an agent.

Even if you’re not in business, you may still need to declare certain payments you receive as assessable income in your income tax return.

When a company is not in business

Most companies are in business if they intend to and are likely to make a profit, however some companies are not in business. For example, a company is not in business if it:

holds assets solely for its shareholders’ private use, and its running costs are funded solely by its shareholders
provides social and recreational activities for members without seeking to make a profit.

Steps to work out if you are in business

Identify all relevant, related activities
Are the activities a business?

When does your business start?

Knowing when will affect the registrations you must have and when you need to apply for them. It may also affect how tax laws apply to your activity, the assets you use, and the tax concessions or deductions available to you.

Have your activities changed?

If your activity changes in a significant way you must reassess whether or not you are in business.

CONTACT ALLAN HALL BUSINESS ADVISORS

Updated COVID-19 business eligibility

Posted on 22 September 2021 | by Allan Hall

Updated eligibility for NSW micro-business grant and JobSaver payment

Eligibility

You must be currently receiving either the NSW micro-business grant or the JobSaver payment and confirm that you:

have continued to experience a decline in turnover of 30% or more, compared to:
- the same period in 2019, or
- the same period in 2020, or
- the 2-week period immediately before lockdown started in your area.
are maintaining your employee headcount stated in your application, if you are an employing business.

For further information about comparison periods, visit the Service NSW website or contact Allan Hall’s Accountants on 02 9981 2300.

How to confirm for either program

Select the ‘Confirm your eligibility’ button.
Log in to your MyServiceNSW Business Profile.
Follow the steps to confirm your eligibility.

Confirm eligibility here »

Other important points

If your business was closed for the fortnight in which you are confirming your eligibility, you can indicate that you have continued to experience a decline in turnover and you don’t need to perform a calculation.
If you compared to either the 2019 or 2020 year in your original application you must compare to the same year for the retest. You can choose to either compare to the corresponding fortnight in either 2019 or 2020 OR compare to the same fortnight that you used in your original application. Once you make this choice it remains fixed for future retesting periods.
If you used the period 12 June to 25 June 2021 as your comparison period in your original application, you MUST continue to compare to this period for all future retesting periods.
You will receive your payment within 5 days of reconfirming your eligibility.
It is a fortnight by fortnight test. If you become ineligible one fortnight this does not disqualify you for becoming eligible again in a subsequent fortnight, where you meet the eligibility conditions. You will be given the opportunity to declare your eligibility each fortnight without re-applying.

Please be aware that there is a high level of scamming activity around COVID-19 rules and regulations and, in particular, grants and relief. These scams are increasingly sophisticated and many involve impersonation such that they may appear to come from legitimate advisors (such as Allan Hall).

At Allan Hall, we will never request money upfront, deposits, transfers to personal accounts, payments via gift cards or other unexpected or unusual payment methods. If in any doubt, contact us via phone before taking actions that appear to be at the request of Allan Hall.

2021 COVID-19 Micro-Business Grant NSW

Posted on 27 July 2021 | by Allan Hall

Cash flow support for NSW micro-businesses impacted by COVID-19 restrictions while continuing to incur business costs.

Closing date 18 October 2021.

» You can apply online using your MyServiceNSW Account

The 2021 COVID-19 Micro-Business Grant provides fortnightly payments to NSW micro-businesses (small business, sole traders or not-for-profits) impacted by recent COVID-19 restrictions.

Available funding

Automatic payments of $1,500 per fortnight.
Payments made in arrears with the first payment backdated to 26 June.
Only one application per ABN and only one application even if multiple businesses under a single ABN.

Eligibility criteria

Must have an ABN and operating in NSW at 1 June 2021. There are some exemptions if you have an ABN outside NSW but can demonstrate you operated within NSW at 1 June 2021.
Aggregated turnover more than $30,000 and less than $75,000 for year-ended 30 June 2020[i].
Decline in turnover of 30% or more due to the Public Health Order over a minimum 2-week period within the Greater Sydney lockdown (26 June and due to end 30 July) compared to the same period in 2019.
Applicant has business costs for which there is no other government support available.
Applicant has not applied for the COVID-19 Business Grant or JobSaver.
Employing businesses must maintain headcount at 13 July.
For non-employing businesses, the business receiving the payments must be the primary income source for the associated person. Individuals with more than one non-employing business can only claim from one business.
Entities earning passive income (such as rent) are not eligible.
Employees can receive Commonwealth COVID-19 Disaster Payments if their employer is receiving this grant.
Non-employing businesses are not eligible for this grant if individuals associated with and deriving income from the business are receiving the Commonwealth Covid-19 Disaster Payment.

Evidence in support of eligibility

Applicant must have experienced a decline in turnover of 30% or more over a minimum 2-week period from 26 June 2021 to 30 July 2021 compared to the same period in June and/or July 2019.
There is no alternate test for businesses not operating in 2019 (or 2019 not a true comparison) or did not meet the minimum $30k turnover. These applicants should contact Service NSW.
Applicants need to supply one of the following as evidence that their turnover was more than $30,000 but less than $75,00 for the year ended 30 June 2020:
- A letter from their accountant;
- Business Activity Statement;
- Business bank statements;
- A tax return or notice of assessment.
If no employees, declare the business is the primary source of income for the owner of the business.
If business does have employees, applicant must declare their employee headcount on 13 July 2021 and notify Service NSW if the employee headcount declines.

Some important notes

Funding to be used to cover costs incurred from 18 July (wages, rent etc.)
Businesses that received the $1,500 NSW Small Business Fees and Charges Rebate can apply for this grant.
Where a business operates through a Trust, it will be required to provide additional information to demonstrate an aggregated turnover of more than $30k but less than $75k is derived through the Trust, as opposed to a business linked to a trust.

Applicants will require an accountant’s prepared declaration as part of the grant submission process. Allan Hall will be able to provide assistance to our clients as we have done with previous NSW grant programs.

See more information at https://www.service.nsw.gov.au/transaction/2021-covid-19-micro-business-grant or call Allan Hall’s team on 02 9981 2300.

[i] based on ATO definition