Best Accounting Software for Side Hustles in Australia (2026)

On 14 October 2026 Yahoo Finance ran the story of a client financial adviser Ben Nash calls Paul: 31, working in marketing on $95,000, shooting weddings on weekends for about $15,000 a year. The money landed in the same account as his salary and was spent as it came. His first tax return with the photography on it produced a bill of $4,800, because at his income every extra dollar is taxed at 30% plus the 2% Medicare levy. Then the ATO wrote to him about PAYG instalments, and from the next quarter he was paying roughly $1,200 every three months towards the current year as well. The article's arithmetic: $4,800 for year one plus four instalments of about $1,200 is $9,600 out the door in twelve months, on a hustle that made $15,000. According to the article, Paul now moves 40% of every payment into a separate account the day it arrives.

For most people the problem with side hustle tax is not the amount. It is that the bill is unexpected and arrives all at once. This guide covers what the ATO expects from an Australian with a job and a side income, how a bill like Paul's builds up, and why keeping proper records in low-cost accounting software is a safer way to avoid one than guessing a percentage. It is general information, not tax advice; the ATO's own pages are linked throughout, and a registered tax agent can confirm how the rules fit your situation.

Do I pay tax on my side hustle in Australia?

Yes, if it is a business. Profit from a side business is added to your salary on your tax return and taxed at your marginal rate plus the 2% Medicare levy. A hobby is not a business, but you may still need to declare some payments as assessable income. The ATO decides by how you run the activity, not by how big it is.

The ATO's test looks at behaviour: an intention to make a profit, a realistic prospect of making one, the scale of the activity, whether it is repeated and continuous, and whether it is run in a business-like way with records, an ABN (Australian Business Number, the number a business puts on its invoices) and a separate account. Selling an old couch on Marketplace is not a business. Shooting a wedding most weekends, tutoring the same three students every Tuesday or restocking an Etsy shop is.

Your employer has withheld tax on your wages only. Once the side activity is a business, the tax on its profit is unpaid until you lodge, which is the $4,800 Paul did not see coming.

Will the ATO find out about my side hustle?

Assume it already knows. Since 1 July 2024 every digital platform that takes a payment for you reports your income to the ATO under the Sharing Economy Reporting Regime, and online marketplaces have been covered by a separate data-matching program for years. The ATO compares what a platform paid you with what you declared, and asks about the gap.

Under the Sharing Economy Reporting Regime, ride-sourcing and short-term accommodation platforms have reported their users' income to the ATO since 1 July 2023, and every other platform (task apps, freelance marketplaces, the rental of goods, and anything else that takes a payment for you) since 1 July 2024. Reports are due by 31 January and 31 July each year, so the figure the platform paid you is on file before you lodge.

Marketplaces are covered a second way. The ATO's online selling data-matching program has collected records from eBay and Amazon on sellers with $12,000 or more in annual sales, covering every year from 2018-19 through 2025-26, and matches them against tax returns. A reported figure is not a tax bill in itself; it is a number the ATO can hold against your return.

Do I need an ABN or to register for GST?

Get an ABN if the hustle is a business; register for GST only when your turnover reaches $75,000 in a year, which most side hustles never do. The ABN matters sooner than the GST line: without one on your invoice, a business customer paying you more than $75 has to withhold tax from the payment at the top rate.

If you are carrying on an enterprise, you are entitled to an ABN as a sole trader. GST registration is required within 21 days of your turnover reaching $75,000, after which you charge 10% GST and lodge a BAS (business activity statement, the form that reports GST to the ATO). The exception is ride-sourcing: if you drive for a rideshare platform you register for GST from your first trip, whatever you earn.

The platform rows apply from 1 July 2023 for ride-sourcing and accommodation and from 1 July 2024 for everything else; the marketplace data covers 2018-19 to 2025-26; the $75 figure excludes GST; and rideshare drivers register for GST from the first trip.

What are the 2026-27 tax rates on side income?

For 2026-27, residents pay nothing on the first $18,200 of total income, 15% from $18,201 to $45,000, 30% from $45,001 to $135,000, 37% from $135,001 to $190,000 and 45% above that, plus the 2% Medicare levy. Side income goes on top of your salary, so it is taxed at the band your salary already reaches.

These are the resident rates for 2026-27. On 1 July 2026 the rate on the $18,201 to $45,000 band fell from 16% to 15%, and it is legislated to fall again to 14% from 1 July 2027.

Someone on $60,000 pays 32 cents in tax on every extra dollar of side profit; someone on $150,000 pays 39 cents. The tax-free threshold does not apply a second time: income earned under an ABN counts towards the same $18,200 your wages have already used.

How does a side hustle tax bill build up?

Through the year nothing is taken out, so the whole year's tax on your profit lands when you lodge. The bill is your profit after expenses multiplied by your marginal rate plus 2% Medicare, and expenses only count if you can prove them. The example below shows both halves.

Mia is an illustrative example, not a real person. She is a nurse on $72,000 who tutors high-school maths two evenings a week. In 2026-27 she earns $9,000 from it and spends $1,000 on textbooks, a tablet and a tutoring platform fee. Her salary already sits in the $45,001 to $135,000 band, and $72,000 plus her profit is still inside it, so every dollar of profit is taxed at 30% plus 2% Medicare.

Mia's employer withheld nothing on the tutoring, so all $2,560 is due in one go when she lodges. The figures ignore HELP repayments and offsets, which can move the number either way.

The $1,000 of expenses is where records pay for themselves. With the receipts, Mia is taxed on $8,000 of profit. Without them, she is taxed on the full $9,000: $2,700 of income tax plus $180 of Medicare, $2,880 in all. Keeping track of her expenses saved her $320.

The same arithmetic catches people out in year two, which is the part of Paul's story that hurt most.

What are PAYG instalments and why does year two cost more?

PAYG (pay as you go) instalments are quarterly prepayments of the current year's tax, worked out from your last return. The ATO enters you automatically once a return shows enough untaxed income. In the first year you are entered, last year's bill and this year's instalments fall in the same twelve months, which is why Paul's second year cost so much more than his first.

The news story said you are moved onto instalments once side income passes $4,000 and the tax on it passes $1,000. The ATO's own rule has three conditions, all of which must be met: instalment income (your business and investment income, before expenses) of $4,000 or more on your latest return, tax payable of $1,000 or more, and notional tax (the ATO's estimate of the tax on that instalment income at current rates) of $500 or more. The ATO writes to you when it enters you and tells you the amount.

You do not have to wait to be told. The ATO's page on paying tax on multiple sources of income describes entering PAYG instalments voluntarily, which turns one large bill into four smaller ones based on your own estimate of the side income, with any overpayment refunded when you lodge. That estimate is only as good as your records. Lodge on time too: since 1 July 2025 the interest the ATO charges on late tax is no longer deductible, so a late bill costs more than it used to.

Guessing a percentage or keeping proper records?

Putting a share of each payment aside is better than nothing, but it is still a guess: the right share depends on your expenses and your band, and you only find out at tax time whether you guessed well. Keeping proper records in accounting software is the safer route, because it shows your real profit, and so the tax on it, at any point in the year.

The weakness of any fixed share is that it cannot see what is happening in the business. A big month of expenses, a jump in income that pushes your salary plus profit into the next band, or a deduction you forgot to claim all change the bill, and a savings account knows none of it.

Low-cost accounting software fixes that in four ways:

• It records every payment and expense as it happens. Connect the bank account your side income lands in and each transaction comes through a bank feed for you to tag as income or a business cost. All four picks connect bank feeds.
• It keeps your receipts. Photograph a receipt on your phone and the expense is saved with the image attached, which is the five-year record the ATO expects and the proof behind Mia's lower bill. All four picks capture receipts: MYOB and Reckon through their mobile apps, Xero through Hubdoc.
• It shows your real profit at any time. Income less expenses, year to date, on one screen. Multiply that by your rate from the table above and you know roughly what you owe during the year, not after you lodge.
• It hands over the figures for your return. The income and expense totals myTax asks for are the totals the software has kept all year, ready for you or your tax agent.

If you send invoices (tutoring, design, photography), check the invoice limits: MYOB and Reckon list unlimited invoicing, Zoho Books caps invoices by plan each year, and Xero's entry plan limits how many invoices you can send each month. BAS and GST lodgement does not matter until you register for GST; all four picks include it, and MYOB, Reckon and Xero lodge directly to the ATO.

The calculator above is preset to five invoices a month, one user and no employees, and the table ranks the four picks by cost at those numbers; change the inputs and it re-sorts. Providers outside these four are on the full accounting software comparison.

How do I declare side hustle income on my tax return?

In myTax, select business or sole trader income when you personalise your return and a business and professional items section appears. It asks for your main business activity and ABN; your business income and expenses go in the business income section that follows, and the profit flows into your taxable income with your wages.

The ATO's myTax instructions for the business and professional items section say the section appears when you select "Business/Sole trader income or loss" at Personalise return, that the ATO pre-fills your business name and ABN if the ABN is active, and that you need details of your main business activity. With a year of records in accounting software, filling it in is a matter of copying totals across.

When is a tax agent worth it?

Consider a registered tax agent at tax time, especially in the first year your return includes a side business. An agent can prepare and lodge the return, check whether your activity counts as a business, and spot deductions you did not know you could claim. Tidy records make that job quicker, which often means a smaller fee.

An agent's time goes on two things: sorting your paperwork and working out the tax. Accounting software does most of the first part before you arrive. Instead of a folder of receipts and a year of bank statements to reconcile, the agent gets a profit and loss report and receipts already matched to each expense. All four picks offer accountant access, so you can invite your agent into the file and let them pull the figures themselves. Fees vary, so ask for a quote and mention that your books are already in software.

Which tool fits which side hustle?

Match the tool to how the money arrives. A reseller needs expense capture and a clean profit figure, because the platform handles the sales side, so a free or entry plan does the job. A tutor or photographer invoices clients directly, so invoicing matters more. Two people sharing one hustle want two logins without paying per seat.

That is the logic of the four picks. Zoho Books' free plan or MYOB's entry plan suits the reseller; any of the four handles invoicing, with Xero's entry-plan invoice cap the thing to watch if you bill often; Reckon is on the list for the two-person hustle. If you can see the hustle becoming your job, Xero's ladder includes payroll from the entry plan up, and our guide for sole traders covers that next stage.

Side hustle tax checklist

1. Open a separate bank account for the hustle and connect it to your accounting software.
2. Tag each transaction as it comes through the bank feed, and look at your year-to-date profit once a month.
3. Photograph every receipt into the app and keep records for five years. The ATO's list of what a business can claim is longer than most people expect.
4. Get an ABN if it is a business and put it on every invoice.
5. Watch the $75,000 line if the hustle starts to grow, and remember that rideshare driving means GST from the first trip.
6. Think about voluntary PAYG instalments through myGov, or extra withholding from your pay, so the tax leaves in smaller pieces.
7. Book a tax agent early if you want help, and give them access to your books rather than a box of paper.

Sources

• Yahoo Finance, ATO warning for Aussies as side hustle triggers $4,800 bill, 14 October 2026
• ATO, Are you in business?
• ATO, What is the Sharing Economy Reporting Regime
• ATO, Online selling data-matching program
• ABR, ABN entitlement for sole traders
• ATO, Registering for GST and ride-sourcing registrations
• ATO, Tax rates for Australian residents and the 2026-27 rate change
• ATO, Paying tax on multiple sources of income
• ATO, Starting PAYG instalments
• ATO, myTax 2026: business and professional items
• ATO, Record keeping for business, business deductions and non-commercial losses