The Fine Print Australia · PUBLISHED 24 JUN 2026 · VERIFIED 24 JUN 2026 · AU EDITION

47% Withheld? Why You Need an ABN for Your Side Hustle (AU)

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If your side hustle is really a business, the ATO says you’re entitled to an ABN — but if you invoice without one, the payer can withhold 47% of the payment under the no-ABN withholding rules.

The number that matters

The central number is 47%: this is the no-ABN withholding rate that can apply when a business pays you and you have not quoted an ABN.

How it quietly costs you

The first quiet money drain is misclassifying a business as a hobby, because the ATO and ABR look at the facts of how the activity is run — repetition, profit intention, commercial scale, records, and business-like organisation — not just whether you “call it” a side hustle.

That matters because once the activity is treated as an enterprise, you are generally entitled to an ABN, and if you do not quote it when invoicing another business, the payer may withhold 47% under the no-ABN rules.

The practical comparison is stark: quoted ABN = paid normally; no ABN = potentially 47% withheld upfront until you sort out the tax side.

The second, compounding trap

The second layer is GST registration once turnover reaches $75,000 in a financial year, because the ATO says you must register for GST within 21 days of crossing that threshold.

If a side hustle grows past that point and you keep operating without the right registrations, you can end up charging prices without GST, then having to catch up later from your own cash flow; the effective cost is the GST you should have collected plus the compliance drag of late correction.

The old-vs-better comparison is: under $75,000 turnover, GST registration is generally not required; at $75,000 or more, it is required and must be done within 21 days.

What this looks like in practice

Mia, 32, Melbourne admin contractor, earns about $38,000 a year from freelance virtual-assistant work, invoices clients directly, uses a sole trader setup, and is about 35 years from retirement.

She would discover:

• Her work looks like a business, not a hobby, because it is recurring, profit-driven, and organised — the ATO/ABR business indicators focus on repetition, commercial scale, and records, not the label she uses.
• If she invoices without quoting an ABN, the payer may withhold 47% of the payment under the no-ABN withholding rules, which is a much harsher cash-flow hit than simply registering properly.
• She is below the $75,000 GST threshold, so GST registration is not yet mandatory; the benchmark is $75,000 turnover, and the ATO says registration is due within 21 days after crossing it.

The full cost of doing nothing

For Mia, the combined long-run cost of Problems 1 and 2 is mainly the cash-flow loss from no-ABN withholding plus the compliance and GST catch-up risk once turnover crosses $75,000.

A simple modelling basis is: if just one year of client payments is subject to 47% withholding instead of normal invoicing, that is a near-halving of cash received until refunds or credits are processed; if her business later passes $75,000, she must register for GST within 21 days, so the combined impact is both immediate liquidity strain and later GST compliance costs.

What to do about it

• Check whether your activity is really an enterprise using the ABR ABN entitlement guidance on the Australian Business Register, where the key indicators are profit intention, repetition, scale, organisation, records, and similarity to other businesses.

• Open the ABR ABN entitlement page and read the business indicators.

• Compare your side hustle against the listed tests: profit, repetition, scale, records.

• Decide whether you are carrying on an enterprise or merely a hobby.

• Good looks like: your activity clearly matches the business indicators, so you can justify getting an ABN.

• Apply for an ABN through the Australian Business Register if your side hustle is an enterprise, because the ABR says entitlement depends on carrying on or starting an enterprise in Australia.

• Use the ABR ABN application pathway for your entity type.

• Enter your business details and activity description.

• Keep the ABN for invoicing and tax records.

• Good looks like: you can quote an ABN on invoices and avoid the no-ABN withholding trap.

• Monitor your turnover against the $75,000 GST threshold using your records, because the ATO says registration is required within 21 days of crossing it.

• Total your GST-turnover from sales as you go.

• Compare it to $75,000 for the financial year.

• If you cross it, register for GST within 21 days.

• Good looks like: you stay below the threshold or register immediately after crossing it.

A myth worth clearing up

Myth: “If it’s just a side hustle, I don’t need an ABN.” Fact: The ATO/ABR says the real test is whether you are carrying on an enterprise; if the activity is a repeated, organised, profit-driven business, you are generally entitled to an ABN even if it is small or part-time.

Sources

• https://www.abr.gov.au/business-super-funds-charities/applying-abn/abn-entitlement
• https://community.ato.gov.au/s/article/a079s000000ZeJF/tax-tips-for-managing-your-side-hustle
• https://business.gov.au/news/what-you-need-to-know-about-side-hustles

Researched 2026-06-24.

Corrections & disclosure: an AI-assisted, human-reviewed guide. Every figure is dated and sourced above. Spot something out of date or wrong? Tell us and we’ll correct it — corrections are noted here and in the video description.