ATO

When your Side Hustle becomes a Business – Next Steps

BAS Agent's Blog, Business Topics / By / / , , , / 3 minutes of reading

In our last blog, we covered whether or not a side hustle like selling items on eBay or being an influencer could be a business and how to tell when a side hustle turns from being hobby-like activity to a business activity. We looked at a list of questions the ATO may ask to help you determine your answer and we quoted the ATO’s definition of what constitutes a business:

“Typically, a business involves a series of continuous and repeated activities that you undertake with the intention of generating a profit. Profit can take the form of money, but it can also be earned through other means, such as receiving goods or services (such as a barter deal). A one-time transaction may also qualify as a business if it is either:

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

You can operate one or multiple businesses simultaneously.“

So, given that you may have reviewed your situation and have ascertained that your side hustle is indeed a business, what do you need to do next? 

There are several steps you need to take when beginning a business. These are listed below:

  1. Make sure you have a tax file number.
  2. Visit your accountant and ask for help regarding the best structure under which to operate your business. This may be a sole trader, company, trust or partnership or some variation of these structure types.
  3. Get an ABN via the Australian Business Register website.
  4. Register for GST if your GST turnover is or will be, $75,000 over the next 12 months. This can include products or services you’ve received instead of money. Note, if your side hustle is ride-sourcing, you need to register for GST from the day you start, regardless of how much you earn.
  5. Register your business name. This can be done on the ASIC website.
  6. Obtain business insurance.
  7. Open a business bank account.
  8. If you intend to employ staff, you need to register for Pay as you go Withholding.
  9. Following on from #5, you will also need to get work cover insurance for your staff. This is state-based so you will need to access this information via your state’s workcover website.
  10. If you intend to pay income tax instalments, register for Pay as you go instalments. You can do this voluntarily or wait for the ATO to tell you when you need to pay instalments.
  11. Depending on the type of business you are running, you may also need to register for Fringe Benefits Tax, Fuel Tax Credits, Wine Equalisation Tax and/or Luxury Car Tax.
  12. Again, depending on your industry, you may need specific state-based licences and council permits. Check with your small business department to find out what you may require.
  13. If you’ve become a director of your company, then obtain a Director ID. Again, your accountant can help you decide if a company structure is appropriate for you.

These are just the basics when starting a new business. There is more to know and do. The best place to start is with your accountant or tax agent. He/she will help guide you through some of these tasks and may even do them for you. Another good place to start is the ATO website – they have a lot of great information to assist you when you are starting a business. Here is their “Before you start a Business” web page. It has loads of useful tips.

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Is my Side Hustle a Business?

BAS Agent's Blog, Business Topics / By / / , , , , , / 2 minutes of reading

As the cost of living continues to rise, more individuals are seeking innovative ways to earn extra income on the side. These additional sources of revenue, commonly referred to as “side hustles,” can include anything from mowing lawns for friends and family to selling items on eBay, creating online content, drop-shipping, becoming an influencer, and more. While this supplementary income can be a welcome boost, it’s crucial to understand when you need to report your earnings from your side hustle for tax purposes. 

The first step is to determine whether or not you are operating a business. The Australian Taxation Office (ATO) has provided a list of questions that can assist you in making this determination. These questions include:

  • Do you intend to operate a business?
  • Do you have the intention and prospect of earning a profit from your activities?
  • Is the size or scale of your activity sufficient to generate a profit?
  • Are your activities continuous and repeated?
  • Are your activities planned, organised, and conducted in a business-like manner? For example, do you:
    • Keep business records and maintain a separate business bank account?
    • Advertise and sell your goods and services to the public, rather than just to family or friends?
    • Operate from business premises?
    • Maintain any necessary licences or qualifications?
    • Have a formal business plan or budget?
    • Have a business name or an ABN?

In addition to these questions, the ATO explains what it means to be in business:

“Typically, a business involves a series of continuous and repeated activities that you undertake with the intention of generating a profit. Profit can take the form of money, but it can also be earned through other means, such as receiving goods or services (such as a barter deal). A one-time transaction may also qualify as a business if it is either:

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

You can operate one or multiple businesses simultaneously.“

In essence, if you are attempting to earn a profit from your side hustle, rather than simply supplementing your overall income, there is a strong possibility that you are operating a business. If this applies to you, the next step is to seek advice on your obligations regarding reporting your income and whether or not you need to register for GST and obtain an ABN. We will cover this topic in our next blog.

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Non-compliant Small Businesses to Face Monthly BAS Reporting

BAS Agent's Blog, Business Topics, GST & BAS / By / / , , , , , / 4 minutes of reading

The ATO has decided that small businesses with a history of non-payment, late or non-lodgement or incorrect reporting, will be moved from quarterly to monthly GST reporting i.e. a monthly BAS.

The ATO will begin this process from 1 April 2025 and will start with around 3,500 small businesses (and no, this is not an April’s Fool joke!). Those businesses affected will need to remain on the monthly cycle for a minimum of 12 months.

The ATO believes that this new protocol will help small businesses to comply with their tax obligations because they will need to be more organised in terms of bookkeeping to lodge a monthly BAS. The ATO also thinks that this will assist cash flow given business owners will need to pay smaller amounts more regularly.

If small business owners continue to ignore their tax debts and compliance obligations, it is not a question of “if” but “when” they will hear from the ATO. From the ATO Deputy Commissioner, Will Day:

‘We take our role seriously and are committed to supporting viable small businesses to comply with their ATO obligations, while also taking firmer action on those who are deliberately not complying to ensure they aren’t getting an unfair advantage. If you’re a small business who continues to deliberately disregard your obligations, you can expect the ATO to move you to more frequent GST reporting’.

The ATO will contact small business owners and their tax professionals if BAS reporting needs to move to a monthly cycle. There will be a review process in place for those small business owners who believe they do not have a history of non-compliance.

If you own a small business and are non-compliant, expect to move to monthly BAS lodgements soon. Contact your tax professional or the ATO ASAP to discuss, as the impact on your business finances and processes will be significant!

My Thoughts

I fully support the ATO’s efforts to recover long-standing tax debts and understand that non-compliance gives some an unfair advantage over those who follow the rules. However, this protocol might worsen the situation for some small business owners. Here are some issues I believe may arise from this ATO campaign:

  • Monthly BAS lodgers must lodge and pay by the 21st of each month, losing the extension given to quarterly online lodgers, who get an extra month. While this could encourage better organisation in bookkeeping and cash flow, it might also lead to more disorganisation and increased tax debt for some. A better idea perhaps, would be to allow business owners to remain on a quarterly cycle but disallow the lodgement extension. That way, they are still forced to be more organised and pay more regularly, but without the onerous task of doing so monthly.
  • Those business owners on a current ATO payment arrangement may need to re-negotiate if they are expected to pay a monthly BAS on top of other tax debt. This is because all current and future BAS must be paid on time in order to retain the payment arrangement. This may be quite difficult for some, but I guess this is what the ATO are trying to achieve – pulling in tax revenue more regularly and on time.
  • Businesses using tax professionals will face higher costs, paying for 12 BAS lodgements per year instead of 4. This increase in bookkeeping/accounting fees will add further financial stress. Some business owners might choose to handle it themselves to save money. While this works for those familiar with accounting, it could result in messy accounts and BAS reporting errors for others.
  • As a bookkeeper/BAS Agent, I’ve noticed that non-compliant clients are often not great business owners. They are disorganised and need constant reminders, which is already challenging on a quarterly cycle. Doing this monthly would be even more frustrating, likely leading to strained relationships and parting ways with clients.

I hope the ATO has considered these implications. While monthly reporting might help some, it could increase financial stress and non-compliance for others.

I do believe some business owners shouldn’t be in business, especially those who think they’re above the law. In my opinion, they should be closed down and made to repay their debts over time. This ATO measure might help, but perhaps more decisive action, like forced business closure (or the threat thereof), is needed.

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ATO Super Clearing House to Close when PayDay Super Begins

BAS Agent's Blog, Payroll & Superannuation / By / / , , , / 2 minutes of reading

You may have heard that Payday Super is coming in July 2026. In short, Payday Super will require all employers to pay their employees’ super on the same day as a pay run is processed. The main reason behind this measure is that the Government wishes to end non-payment and underpayment of super by some employers as this is effectively wage theft. The measure will also mean that millions of employees will receive higher retirement savings due to their super contributions being paid earlier and more frequently.

What you may not know is that from 1 July 2026, the ATO Small Business Super Clearing House (SBSCH) will close. Yes, you heard right—it is closing its doors at the same time as Payday Super begins.

So, what can you do to prepare if you are a current SBSCH user? Your options are limited. You can either move to your default super fund’s clearing house or use the super functionality in your payroll software, such as Xero, MYOB, or QBO. I recommend not waiting until the SBSCH closes to get this organised. Make the change as soon as practicable.

How did I hear about the SBSCH closing? I read the fact sheet from the Government Treasury website. You can access the fact sheet here if you wish to read the details behind Payday Super.

The fact sheet breaks down many other details about Payday Super and is an important read if you are an employer. I suggest you take the time to review it and figure out how you will apply this change to your payroll processes when the time comes.

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Super to be paid on Paid Parental Leave

BAS Agent's Blog, Payroll & Superannuation / By / / , , , / 1 minute of reading

Good news has arrived for those planning a family in the next year or so. The government has decided to pay super guarantee equivalent payments on government-funded Paid Parental Leave (PPL). This will begin from 1st July 2025 i.e. for any babies born or adopted on or post this date. This measure is now law.

While Services Australia will continue to facilitate the PPL process, the ATO will be responsible for paying the super component (not employers). The ATO will pay the super in a lump sum at the start of the following financial year at the then super rate of 12% plus any interest owing. The first payments will be processed in July 2026.

This is a step forward in ensuring that those who choose to be stay-at-home parents are not disadvantaged in terms of future retirement savings. This is a good thing! A fairer system for all!

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Free Courses for Small Business from the ATO

BAS Agent's Blog, Business Topics / By / / , , , / 2 minutes of reading

The ATO has set up a website to help small business owners learn about running their businesses. It’s called Essentials to Strengthen your Small Business. The site covers the 5 stages of business life (from idea to exit) and offers 21 short courses across each stage. In this blog, I’ll walk you through this website so you can see if it’s right for you!

On the website, you’ll find courses linked to one of the 5 stages of your business: Idea, Start-up, Day to Day, Change, and Exit.

Idea: when you’re thinking about starting a business.

Start-up: when you’ve just begun and need guidance on what to do next.

Day to Day: when your business is running, and you want help with everyday management.

Change: when you plan to reshape or update your business.

Exit: when you’re retiring, selling, or closing down your business.

21 Courses

The 21 courses match the stage your business is in. They cover topics from starting a business to keeping records, closing down—and everything in between. For instance, clicking “Start-up” shows you 11 courses on GST, cash flow, record keeping, home-based business deductions, and more. You can filter by business structure and industry to find the most relevant courses.

Course Breakdown

Each course has an overview, a video, and modules you can do in any order. If some modules don’t apply to you, skip them. Every course has “fast facts” – key points from the lessons. There are also “quick links” for more info. After each course, take a knowledge check to see what you need to review. Plus, there’s an “action plan” –  a checklist to guide your next steps based on your learning. You can download the fast facts and action plan as PDFs or Word Docs to share or keep.

Course Account

Create an account on the website to track your courses. With an account, you can create a learning path that fits you and your business. Add or remove courses anytime from the course list. You can also save notes and favourite pages to visit later from your dashboard.

Here’s the video from the website that shows you how everything works, for those who like watching instead of reading!

This learning hub is perfect for small business owners looking for guidance without spending much time or money. It’s one of the best ATO initiatives I’ve seen recently.

For those who use the Cash Flow Coaching Kit, please note that it will be moved to this new Essentials website on June 30 2024.

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Client Agent Linking – Useful Links, Videos & Phone Numbers

BAS Agent's Blog, Client Agent Linking, How To / By / / , , / 2 minutes of reading

In a previous blog, I discussed the challenges agents and clients face because of Client Agent Linking (CAL). Many of the issues encountered are related to setting up various digital identity software and/or not understanding the CAL process. In this blog, I will share useful links, videos and phone numbers to help those stumbling through this difficult task! 

As mentioned, the CAL process is complicated. It involves setting up a myGovID, linking the ABN to the myGovID in Relationship Authorisation Manager (RAM), logging into Online Services for Business (OSB), nominating a new agent and finally advising the agent that the nomination has occurred. The links to assist with setting up myGovID, RAM and OSB are below, along with a step-by-step guide to CAL both in written and video format. Some phone numbers are listed for those who prefer to call a human being! I hope this helps those who are struggling with CAL.

  1. How to nominate an agent in online services for business (download)
  2. The agent nomination process explained
  3. Troubleshooting guide for agents
  4. How to set up myGovID
  5. Online services for businesses
  6. Relationship Authorisation Manager (RAM)
  7. Link your myGovID to your ABN
  8. For agents – think before you link!

CAL – Useful Phone Numbers

  1. ATO – help with nominating an agent or with online services for business – 132866
  2. ATO – help with late lodgements and payments due to not being able to link to an agent – 1300 660 048
  3. ATO – agent can’t link a new client in online services due to a system error – 137286 (only call if the client has completed the nomination process)
  4. RAM – 1300 287 539 (select option 3 for RAM enquiries)
  5. myGovID – 1300 287 539 (select option 2, then option 1 for myGovID enquiries).

CAL – Useful Videos

ATO Client-To-Agent Linking Steps: How to nominate an agent in Online Services for Business

Client / Agent Linking – An ATO How-To Tutorial

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Think you can get away with not paying your employees’ super? Think again!

BAS Agent's Blog, Payroll & Superannuation, Single Touch Payroll / By / / , , , , , / 3 minutes of reading

Employers intentionally not paying their employees’ super has always been a bugbear of mine. If you follow my Twitter (X) account, you may have seen the hashtag I use: “#notyourmoney“. I use this hashtag because I believe that employee superannuation is not your money and never will be and I want to enforce this concept. These irresponsible employers anger me. It is completely wrong to hire people and then fail to fulfill the contract you agreed upon, which includes paying their super. In my opinion, not paying super is equivalent to stealing.

In the past, employers were able to get away with this unacceptable behavior because the Australian Taxation Office (ATO) only found out about it when employees reported them. At that point, the ATO would investigate, audit, and penalise these employers. This reactive approach has resulted in an estimated $2.5 billion shortfall in unpaid super. This is a truly disgraceful situation.

But things are about to change…

In the 2023-24 Federal Budget, it was announced that the ATO will receive $40.2 million for super compliance measures. This funding includes $27 million for data matching capabilities to identify and take action on cases of Superannuation Guarantee (SG) underpayment, as well as $13.2 million for consultation and co-design.

So what does this mean? Who/what will the ATO be data matching with?

Firstly, it is now widely known that the ATO receives payroll data from employers through Single Touch Payroll events (STP). This data includes the superannuation amounts owed to employees’ super funds. The ATO also receives information about employees’ super from the Australian Prudential Regulation Authority (APRA) through the Member Account Transaction Service (MATS). MATS is a reporting service used for more frequent and detailed reporting of member super contributions and transactions. The ATO utilises the information from both sources to identify potential non-compliant behaviour by employers.

With increased funding from the budget, the ATO will intensify data-matching activities between STP and MATS. This shift from a reactive to a proactive approach means that the ATO will be able to initiate audits themselves instead of relying on employees to report non-compliance after the fact.

It is important to note that this data-matching activity is not new. It has been ongoing since 2019, with the ATO reporting a 24% increase in investigations of super non-compliance. What is new is the improved data matching capabilities enabled by better technology and more comprehensive STP data.

The ATO is now more focused than ever on addressing super non-compliance. They have the necessary tools and resources to conduct investigations and audits on a large scale.

This makes me feel more positive about this problem. I sincerely hope the ATO succeeds in its efforts. I have a strong aversion to employers who think they can evade paying super. It is essentially stealing, a white-collar crime. Thanks to the ATO’s real-time monitoring, the likelihood of getting away with non-payment of super is rapidly decreasing. And that is a very good thing!

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Managing myGovID when devices are upgraded or added

BAS Agent's Blog, Business Topics, Useful Apps / By / / , , , / 2 minutes of reading

myGovID is an app that allows you to securely access ATO online services. It proves to the ATO that the person attempting to access a service/info is who they say they are – super important in this day and age of constant cyber attacks etc.

Setting up the app for the first time requires quite a few steps and can be slightly complicated. Sadly, if you buy a new mobile or tablet, or wish to use your myGovID on multiple devices, you will need to set up your myGovID again and re-verify your identity. You cannot just install the app on your new device and expect it to work. Below are the steps you need to follow to solve this issue.

How to set up myGovID on a new device

Firstly, you need to select “reset the app” within your myGovID app’s settings.
Then, select “I am an existing user”.
Then, follow the prompts to:

  • enter your latest myGovID email address – this is linked to the identity documents you previously verified. Setting up with a different email address will lock your myGovID on all devices and you’ll be unable to use it.
  • re-verify your identity – ATO recommends using the identity documents you previously used.

For security purposes, you’ll receive an email letting you know your myGovID is active on another device. You can view your myGovID setup history in your app.

Each time you set up your myGovID, its identity strength is unique to that device. This means if you set up your myGovID on multiple devices, the identity strength will only reflect what identity documents you’ve verified on that device. For example, you could have one device with a Strong identity strength and another device with a Standard identity strength. To access a service with your myGovID, that device needs to meet the minimum identity strength required of that service. Where you’re setting up on a new device, you need to take additional steps if you transferred your app.

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ATO STP Filing Error Codes – what do they mean and how do you fix them?

BAS Agent's Blog, Payroll & Superannuation, Single Touch Payroll / By / / , , , / 2 minutes of reading

At the time of writing this blog, most employers are actively submitting payroll events via Single Touch Payroll (STP). STP has been around since July 2018 and has now evolved into STP Phase 2. Most software companies used by small businesses to file STP reports, are now STP 2-enabled, so many employers will be reporting payroll via this mode.

While the process of filing or reporting payroll via STP is fairly straightforward, there can be occasions where things may go wrong. This is particularly true now, given the setup for STP Phase 2 is quite involved and onerous. Should the setup for STP 2 not be done correctly, this will most certainly lead to filing errors.

If a pay event is returned after filing it, the ATO will provide an error code that describes the issue. While these codes are useful in terms of helping the lodger understand what is wrong, they do not assist in providing details about how to fix the error within the software you may be using.  Luckily, there is help available from each of the main software providers. 

Here is a list of the software providers and the links to their help pages, should your filing return an ATO error code:

MYOB

QBO

Xero

Also, from Reckon, here is a list of the most common submission errors via the ATO. Each error code is explained and a reason behind the error is given. This can be a helpful starting point when trying to rectify any STP errors.

I hope this blog has been helpful to you if you are an employer or bookkeeper. It would be a good idea to add the link for your chosen software to your favourites list for future access, should you encounter an STP filing error.

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