From freelance work after hours and selling products online to driving for an app, renting out a room or earning money from social media, side hustles have become a useful way to bring in some extra income.
But there’s one extra partner you may not have factored into your venture: SARS.
Whether it’s your full-time job or something you do on evenings and weekends, income earned from a side hustle generally needs to be declared. This can include freelance or consulting fees, commission, online sales, Uber or Bolt income, content-creator and affiliate earnings, and rental or Airbnb income.
A small, once-off hobby activity with no real intention of making a profit may be treated differently. Once you are actively doing something to make money, however, it’s safer to regard it as taxable income.
The good news: expenses count too
If your side hustle qualifies as a trade, you may be able to deduct expenses incurred in producing that income.
A freelancer, for example, may have legitimate data or airtime costs. Someone selling handmade products could claim qualifying materials, while a driver may be able to claim business-related vehicle expenses, provided the necessary records and logbook are kept. Equipment and certain home-office costs may also qualify, depending on the circumstances.
The operative word is legitimate. A side hustle isn’t a licence to put your entire monthly grocery bill through the books.
When provisional tax enters the picture
Side-hustle income is generally declared on your ITR12. Depending on the nature and level of the income, you may also need to register as a provisional taxpayer and make tax payments during the year rather than waiting for filing season.
This is worth checking sooner rather than later. An unexpected tax bill has a habit of taking the shine off that extra income.
Paperwork: boring, but useful
Keep proper records from day one: invoices, receipts, bank statements, platform payout reports and evidence supporting any expenses you claim.
A separate bank account or card for your side hustle can also make tracking income and expenses much easier. And don’t assume that income paid electronically flies under the radar – SARS receives information from third parties and may query discrepancies between the income reflected in your financial records and what appears on your tax return.
The bottom line? A side hustle can be a great way to supplement your income or even test the waters for a future business. Just make tax part of the plan from the start.
Making money on the side? Speak to us about what needs to be declared, what expenses you may claim and whether provisional tax applies to you.
