Having a side-hustle is a great way to increase your income and build wealth. Managing your new and improved finances, however, is a bit more complex than simply collecting a wage or salary from your main job. That's why today, we'll be exploring five tips for handling your side-hustle income at tax time so you don't end up with a massive mess.

Know What You Owe

First up, you need to work out how much tax you're actually going to owe the ATO. Most income streams are subject to tax. So, before you get too excited by those new funds rolling in, find a good tax calculator in Australia, and work out how much is actually yours and how much you're going to have to hand over to the government.

Have A Separate Account For Storing Taxes

Parting with your hard-earned cash is rarely fun, so it's important to separate the funds that you owe the taxman from your normal account. This will help you avoid accidentally spending it or staring at a balance you're not allowed to use and simply getting mad.

The ideal approach is to open a high-interest savings account with a bank that is not your usual one and transfer the tax component of each payment you receive as soon as it hits your main account. This provides dual benefits. Not only does out of sight mean out of mind, but you'll also be able to earn interest on the money you owe in tax. The interest that you earn will be minimal in the current economic climate, but it's better than having your money sitting there doing nothing.

Don't Forget About Your Super

Just because you're receiving regular super payments from your nine-to-five doesn’t mean you shouldn’t use some of the income from your side-hustle to save for your future. Not only is your super your investment for your future, but it's also a great way to receive tax perks if you're contributing the right way.

It’s easy to set up direct-debit contributions that you can claim back at tax time. Another option is to switch to a self-managed fund and have an SMSF Accountant manage things for you. Many people find that this is the best way to get the maximum benefits from contributing extra to their super.

Claim Everything You Can

Finally, a new source of income also means new tax deductions. Things you may not have even thought about (like your phone bill or the creative design studio you hired to build your website) can be used as deductions.

Claiming every deduction to which you’re entitled is a great way to reduce your tax bill and offset some of the cost of paying for these necessary services in the first place. Keep receipts for every dollar you spend on your side-hustle, and your accountant will be able to help you work out what's claimable and what's not.

Keep Good Records

Speaking of keeping receipts, it's also a good idea to keep a record of all incomings and outgoings for at least a few years in case you get audited by the tax department. As long as everything checks out, the chances of this are low, but they're never non-existent. So, it's important to be prepared in the event that you have to provide proof of your business activities.